Tuesday, December 12, 2017

JPMorgan socked with $920 million fine

WASHINGTON — JPMorgan Chase & Co. will pay $920 million and has admitted that it failed to oversee trading that led to a $6 billion loss and renewed worries about serious risk-taking by major banks.

U.S. and U.K. regulators said Thursday that the largest U.S. bank's weak oversight allowed traders in its London office to assign inflated values to transactions and cover up huge losses as they ballooned. Two of the traders are facing criminal charges of falsifying records to hide the losses.

The combined amount JP-Morgan is paying three U.S. regulators and the U.K. Financial Conduct Authority adds up to one of the largest fines ever levied against a financial institution.

The Securities and Exchange Commission fined the bank $200 million and required a rare admission of wrongdoing. The Federal Reserve Board imposed a $200 million penalty, while the Office of the Comptroller of the Currency set a $300 million fine. The British regulator fined the company $220 million.

The U.S. Justice Department is still investigating the bank for possible criminal violations.

The SEC said that the breakdown in supervision stretched beyond the trading operations to the bank's top executives.

"JPMorgan's senior management broke a cardinal rule of corporate governance: inform your board of directors of matters that call into question the truth of what the company is disclosing to investors," said George Canellos, co-director of the SEC's enforcement division.

New York-based JPMorgan called the settlements "a major step" in its efforts to put its legal problems behind it.

The bank said it cooperated fully with all of the agencies' investigations and continues to cooperate with the Justice Department in its criminal prosecution of the two former traders.

"We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them," JPMorgan CEO Jamie Dimon said in a statement.

The trading loss that surfaced in April 2012 shook the financial world and damaged the bank's reputation. JPMorgan was one of the few financial institutions to come through the 2008 financial crisis without suffering major losses.

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