JP Morgan will pay $700M in fines and admit wrongdoing in the London Whale trading mess
Posted by
Brian (aka trav007)
Sep 16 '13, 14:16
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Updated September 16, 2013, 4:08 p.m. ET
J.P. Morgan to Agree to 'London Whale' Fines
Bank to Admit Wrongdoing as Part of SEC Settlement
The Wall Street Journal
By ANDREW ACKERMAN AND SCOTT PATTERSON
WASHINGTON—Regulators are expected to hit J.P. Morgan Chase JPM +1.05% & Co. with at least $700 million in penalties as part of a settlement related to the bank's handling of the "London whale" trading loss last year, according to people familiar with the matter.
The Securities and Exchange Commission, the Office of the Comptroller of the Currency and other regulators are expected to fault the company for inadequate internal controls tied to the derivatives trades, which ultimately lost the company more than $6 billion. The regulatory actions are expected to be announced this week.
In a high-profile win for the SEC, J.P. Morgan is expected to admit wrongdoing as part of its civil settlement with the agency. The SEC under Chairman Mary Jo White is shifting towards tougher settlements that include acknowledgment of wrongdoing.
A spokesman for J.P. Morgan declined to comment.
The settlement is related to inaccurate values two former traders in the London outpost of the Chief Investment Office placed on their own transactions. Regulators are expected to cite the firm for failing to adequately supervise the former traders and for lacking sufficient internal policies to prevent an alleged cover-up of their losses on the bets.
U.S. prosecutors last month filed criminal charges against the two former traders, Javier Martin-Artajo and Julien Grout, with four counts of conspiracy, wire fraud, faking books and records and causing J.P. Morgan to make "false and misleading" statements in two securities filings in 2012. The two men hid hundreds of millions of dollars in losses, prosecutors alleged.
Mr. Martin-Artajo supervised Bruno Iksil, the so-called London whale behind the trades, and other traders in the London office. Mr. Martin-Artajo turned himself in to police in Spain late last month.
Mr. Grout worked for Mr. Iksil and was responsible for recording daily values on his trading positions, according to information provided to a U.S Senate panel that looked into the trading.
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