JPMorgan hit with huge fine over trading scandal

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JPMorgan hit with huge fine over trading scandal

JPMorgan hit with huge fine over trading scandal
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The biggest bank in the US – JPMorgan Chase – is to pay $920 (680 million euros) for failures over the so-called “London Whale” trading scandal.

That money will go to regulators in the US and Britain because of the bank’s poor systems for controlling risk and financial reporting.

It also failed to inform regulators about deficiencies in risk management that had been identified by the bank’s own management.

It lost $6.2 billion in those trades, and two JPMorgan traders still face criminal prosecutions over the matter.

JPMorgan called the settlements of the civil probes “a major step in the firm’s ongoing efforts to put these issues behind it”.

Bruno Iksil, the trader whose big bets earned him the nickname London Whale, has signed a cooperation agreement with prosecutors and has not been charged with any wrongdoing.

Two others who worked with him in London, Javier Martin-Artajo and Julien Grout, have been criminally charged by US prosecutors over their role in the scandal, accused of trying to hide the mounting losses from the derivatives trades.

More than a tempest in a teapot

JPMorgan Chase CEO Jamie Dimon had initially dismissed the whole affair as a “tempest in a teapot”.

He has repeatedly apologised for that remark and said the bank was “stupid” in handling the trades from a London desk of the bank’s Chief Investment Office.

While Dimon is not cited by name in the SEC’s administrative order, the regulatory filing notes that he is included in its references to “senior management”.

George Canellos, co-director of the SEC’s enforcement division, said in a statement, “At its core, today’s case is about transparency and accountability, and JPMorgan’s admissions are a key component in that message.”

He said the bank admitted that it “broke the law – because JPMorgan’s egregious breakdowns in controls and governance put its millions of shareholders at risk and resulted in inaccurate public filings.”

The company is also currently being investigated for possible bribery in hiring practices in China and potentially fraudulent sales of mortgage securities.