JPMorgan makes deals to pay $920 million for Whale probes

The headquarters of JPMorgan Chase and Co. on Park Avenue in midtown Manhattan, New York . Photo: AFP

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Updated: Thu, Sep 19 2013. 07 23 PM IST

JPMorgan Chase and Co. will pay $920 million in penalties in two countries to settle some of its potential liabilities from it “London Whale” derivatives trading losses last year, according to terms made public by regulators on Thursday.

The penalties include $300 million to the US office of the Comptroller of the Currency, $200 million to the Federal Reserve, $200 million to the US Securities and Exchange Commission and £137.6 million ($219.74 million) to the UK’s Financial Conduct Authority.

The regulators’ citations focus on failures in risk management and financial reporting systems. The biggest US bank was also cited for failing to tell its board of directors and regulators about deficiencies in its risk management systems that had been identified by management.

The settlements are a major milestone in the drive by JPMorgan chief executive Jamie Dimon to resolve legal issues weighing on the bank, but leave unresolved a probe by US prosecutors into the derivatives debacle. The “London Whale” derivatives losses last year totalled $6.2 billion.

Dimon, in a statement issued by the company, said, “We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them.”

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

JPMorgan also faces other investigations into areas that include possible bribery in hiring practices in China and potentially fraudulent sales of mortgage securities.

JPMorgan has been under intense scrutiny from the US government since May 2012, when Dimon disclosed that the firm was losing billions of dollars on derivatives deals that had been questioned a month earlier in press report.

Dimon initially criticized those reports as a “tempest in a teapot.” He has repeatedly apologized for that remark and said the bank was “stupid” in handling the trades from a London desk of the bank’s chief investment office.

 

PRAVEEN SHARMA

PGDM IST