JPMorgan pays $920M, admits fault in trading loss
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 JPMorgan is paying three U.S. regulators and the British 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 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.
New York-based JPMorgan called the settlements "a major step" in its efforts to put its legal problems behind it. The bank said it has cooperated fully with all of the agencies' investigations.
"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.
The fallout even ensnared Dimon, who initially dismissed reports of the losses. He later acknowledged the magnitude of the losses, admitted to Congress that the bank failed in its oversight, and took a multimillion-dollar pay cut.
As part of the settlement, the SEC required JPMorgan to acknowledge that it violated securities laws in failing to keep watch over the traders. That is a first for a major company since newly appointed SEC Chairwoman Mary Jo White insisted the agency change a long-standing practice of allowing companies and individuals to agree to deals without admitting or denying wrongdoing.
The nearly $1 billion in penalties levied over the London trading loss was the biggest of several regulatory actions against the bank announced Thursday.
Also Thursday, JPMorgan was ordered to pay $80 million in fines and about $309 million in refunds for billing customers for identity-theft protection they never received. The Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau said about 2.1 million credit-card customers were affected by the illegal practice.
The Comptroller of the Currency also cited JPMorgan for improper practices in its collection of credit-card and other consumer debts, other than mortgages. The agency also said the bank failed to fully comply with a law capping military service members' interest on consumer loans at 6 percent a year.
JPMorgan promised to correct the problems in both those separate cases.
THE LIST OF FINES
and Exchange Commission $200M
Reserve Board penalty
Office of the Comptroller
of the Currency
U.K. Financial Conduct Authority penalty