JPMorgan Chase has been accused of ignoring risks and misleading investors over huge losses in derivatives trading.
In a damning report, the US Senate’s Permanent Subcommittee on Investigations also said bosses at the largest US bank fought with regulators and tried to work around rules as it dealt with those mushrooming losses from the so-called “London whale” trades.
Top managers at the bank were told for months about the bad derivatives bets that ended up costing the bank the equivalent of more than 4.7 billion euros, but did little to rein them in.
The report boosts the arguments of politicians pushing for stricter financial reform regulations.
A JPMorgan spokeswoman said: “While we have repeatedly acknowledged mistakes, our senior management acted in good faith and never had any intent to mislead anyone.”
Senate investigators also faulted regulators at the Office of the Comptroller of the Currency for missing red flags and failing to be aggressive in monitoring problems at the bank.
The agency was informed of JPMorgan’s risk limit breaches and of changes to the model the bank was using to calculate its risk, yet raised no concerns at the time, the report said.
An OCC spokesman said the agency recognises shortcomings in its supervision and has taken steps to improve its supervisory process. The spokesman also said the agency is continuing to investigate the matter and “will take additional action as appropriate.”
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