WASHINGTON: The London Whale is the gift that keeps giving for regulators.
JPMorgan Chase & Co has agreed to pay the latest in a string of fines for the disastrous trades and admit wrongdoing, this time in a settlement with the US Commodity Futures Trading Commission.
The bank agreed to pay
$100m and admit its traders acted recklessly, the CFTC said yesterday. The bank was instructed to send the funds to accounts receivable at the CFTC’s division of enforcement.
The settlement follows one month after it paid $920m to four other US and British regulators to resolve probes of the bank’s $6.2bn in derivative losses involving its chief investment office.
The episode has proven to be one that just about every regulator the bank deals with has wanted to investigate and levy fines. The Justice Department, even after filing criminal charges against two former JPMorgan traders who allegedly helped conceal the losses, is still investigating whether to bring any action against the bank.
“We are pleased to be able to put behind us another aspect of the CIO (chief investment office) trading matter by the resolution of the CFTC investigation,” JPMorgan spokesman Joseph Evangelisti said.
The settlement with the CFTC comes as JPMorgan continues to deal with regulators and US authorities on a number of fronts.
The bank is in the middle of trying to negotiate a global settlement with federal prosecutors over its role in the packaging and selling of faulty mortgage-backed securities that could result in a potential $11bn settlement.
On Friday, JPMorgan announced it has set aside up to $23bn in reserves to pay for all its potential legal bills to come.
The CFTC, in its case, charged the bank with violating a prohibition on manipulative conduct when it traded in the credit default swaps that the bank had built an outsized exposure to by early 2012 and then needed to quickly exit to try to minimise the losses.
By selling a huge volume of swaps in a concentrated period, the bank’s traders “recklessly disregarded” the principle that legitimate market forces should set prices, the CFTC said.
REUTERS
