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JP Morgan fined £570m over 'London Whale' losses
by David Campbell on Sep 19, 2013 at 14:06
UK and US regulators have fined JP Morgan £570 million over ‘serious failings’ which led to its losing $6.2 billion on trades placed by its Chief Investment Office (CIO).
The UK's Financial Conduct Authority levied £137.6 million ($220 million). The bank has also agreed to settle actions bought by the US regulators, paying out $200 million to the SEC, £300 million to the Treasury's Office of the Comptroller of the Currency and $300 million to the Federal Reserve.
'JP Morgan’s conduct demonstrated flaws permeating all levels of the firm: from portfolio level right up to senior management,' said the FCA in a statement.
Head of enforcement at the FCA Tracey McDermott added: 'When the scale of the problems at JPMorgan became apparent, it sent a shock-wave through the markets.
'Maintaining the integrity of markets is a key part of our wholesale conduct agenda. We consider JP Morgan’s failings to be extremely serious such as to undermine the trust and confidence in UK financial markets.'
The losses stemmed from trades placed against credit derivative swaps on specific tranches of commercial bond indices by JP Morgan trader Bruno Iksil in 2011/2012.
The size of the fines was related to attempts to cover up the paper trail however, with the initial announcement of $2 million in losses in May 2012 snowballing to potentially above $7 billion.
US prosecutors said last month that a criminal investigation into the circumstances of the losses was on-going, after two London-based traders were formally charged with hiding losses.
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