Friday, September 20, 2013
People stand in the lobby of JPMorgan Chase headquarters in New York. The bank will pay $920 million and must admit that it failed to oversee trading that led to a $6 billion loss.
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 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 still is 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.