JP Morgan Settles with Regulators for $920 Million over Trading Losses

JP Morgan has settled with regulators over multi-billion dollars in trading losses incurred by its London office about a year ago.  The bank agreed to the imposition of $920 million in fines.  The agreement is with a group of regulators that included the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Federal Reserve, and the Financial Conduct Authority in London.  JP Morgan will pay about $300 million to the comptroller and about $200 million to each of the other offices.

Of significance in the settlement is that the regulators extracted an admission of wrongdoing from the bank.  Historically, this is very unusual as most settlements with regulators in the past have provided that the charged party agreed to the settlement provisions without admitting or denying the allegations.  What probably makes the admission more palatable for JPMorgan is that the episode resulted in massive losses for the bank, not others.  Moreover, the settlements were regulatory orders and not judicial findings of fact and law.

While the bank admitted to wrongdoing, no individuals did so.  This creates the legal fiction that the bank was able to break the law without any of individuals making decisions for it admitting to the same.  Nevertheless, the settlement orders did attribute blame to unnamed senior management, citing deficiencies in oversight and internal reporting and failure to apprise the bank’s board of directors.  The SEC stated that its critique of senior management referred to senior officials.

An interesting side note is that the settlement did not include the Commodity Futures Trading Commission.  The enforcement staff of that office is investigating whether JPMorgan manipulated the market for derivatives through its trading.  If the office files an enforcement action, it will be interesting to see the allegations and understand why the office was not a part of the remaining global settlement.

Please see The New York Times for an article about the settlement.

About Richard Serafini

Welcome to my blog. I am an attorney and practice in the area of corporate trial work. Areas of particular emphasis are white collar defense, securities litigation, health care litigation, internal investigations, RICO, and financial litigation. I will be posting interesting developments in my areas of interest. I hope that you find this blog helpful and informative.