The Two-Way
7:44 am
Thu September 19, 2013

Whale Of A Fine: JPMorgan Chase To Pay $920M In Penalties

Originally published on Thu September 19, 2013 9:39 am

JPMorgan Chase has agreed to acknowledge that it violated federal securities laws and will pay $920 million in penalties assessed by regulators in the U.S. and U.K. to settle charges related to the huge trading losses racked up by its London traders last year, the Securities and Exchange Commission announced Thursday morning.

As we wrote earlier this week when word of the pending settlement first emerged, this all:

"revolves around an investigation from across the federal government and the globe over trading losses, first announced in May, that have ballooned to more than $6 billion. Regulators including the Securities and Exchange Commission and the Office of the Comptroller of the Currency allege that JPMorgan had inadequate risk controls in place when traders made complex derivative bets that ultimately led to the losses.

"Last month, two traders were charged with covering up the losses. The U.K. trader who placed the bad bets, Bruno Iksil, became known as the 'London Whale' because of the large size of the trades he made for the company's London office. Iksil is now cooperating with authorities and is likely to avoid prosecution."

Now, according to the SEC:

"JPMorgan has agreed to settle the SEC's charges by paying a $200 million penalty, admitting the facts underlying the SEC's charges, and publicly acknowledging that it violated the federal securities laws. ...

"As part of a coordinated global settlement, three other agencies also announced settlements with JPMorgan today: the U.K. Financial Conduct Authority, the Federal Reserve, and the Office of the Comptroller of the Currency. JPMorgan will pay a total of approximately $920 million in penalties in these actions by the SEC and the other agencies."

In a statement, JPMorgan says:

"The settlements are a major step in the firm's ongoing efforts to put these issues behind it. The Company cooperated extensively with each of these inquiries, and continues to cooperate with ongoing inquiries, including the prosecutions of the two former CIO employees.

"Jamie Dimon, Chairman and Chief Executive Officer, said: 'We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them. We will continue to strive towards being considered the best bank - across all measures - not only by our shareholders and customers, but also by our regulators. Since these losses occurred, we have made numerous changes that have made us a stronger, smarter, better Company.' "

In the second quarter of 2013, JPMorgan reported net income of $6.5 billion.

Related: The New Yorker looks at "Why The JPMorgan Settlement Falls Short."

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