WASHINGTON (Reuters) - JPMorgan Securities (JPM.N: Quote, Profile, Research) fired the managing director of its municipal derivatives service last month after learning a grand jury was investigating him, according to a regulatory filing.

According to the filing with the Financial Industry Regulatory Authority, JPMorgan learned in February that broker Douglas MacFaddin was the target of a Justice Department probe of municipal bonds. He was let go on March 11, after working for the firm for 14 years.

MacFaddin had also worked for Prudential Equity Group, Morgan Stanley and Salomon Brothers.

Since 2006, the federal government has conducted a widespread investigation of allegations of bid-rigging for municipal bond derivatives, including guaranteed investment contracts. The Securities and Exchange Commission, Justice Department and Internal Revenue Service have all been involved.

In its annual report filed in February, JPMorgan said the Justice Department's antitrust division in New York and the SEC's Philadelphia Regional Office have been "conducting parallel investigations of possible antitrust and securities violations in connection with the bidding or sale of guaranteed investment contracts and derivatives to municipal issuers."

JPMorgan also said it was cooperating with the investigations, having produced documents and other information, and that the federal government was interested in its derivatives' practices from 2001 to 2005.

A spokesman from JPMorgan confirmed that MacFaddin had left the firm but would not comment further. Contact information for MacFaddin was not immediately available.

(Reporting by Lisa Lambert; Editing by Leslie Adler)