- POSTED: 19 Sep 2013 21:28
- UPDATED: 19 Sep 2013 22:44
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Banking giant JPMorgan Chase on Thursday agreed to pay US$920 million to settle securities law violations US and British government agencies related to the "London whale" trading debacle.
NEW YORK CITY: Banking giant JPMorgan Chase agreed on Thursday to pay US$920 million in fines to US and British regulators over actions involved in last year's "London whale" trading debacle.
The global settlement includes an admission by JPMorgan that it violated US securities laws.
The admission is contained in a 15-page statement of facts in the case that JPMorgan, the biggest US bank by assets, said shows it "violated the federal securities laws".
The US Securities and Exchange Commission pushed for the admission "because JPMorgan's egregious breakdowns in controls and governance put its millions of shareholders at risk and resulted in inaccurate public filings", said the SEC co-director of enforcement, George Canellos.
The violations stem from the misstatement of financial results and poor internal controls over employees who were responsible for US$6.2 billion in trading losses in 2012.
The "London whale" trading violations "demonstrated flaws permeating all levels of the firm: from portfolio level right up to senior management", said the Financial Conduct Authority, the British regulator, which fined JPMorgan US$220 million in the case.
Besides the FCA penalty, JPMorgan will pay a combined US$700 million in fines to US regulators: US$200 million to the SEC, US$200 million to the Federal Reserve and US$300 million to the Office of the Comptroller of the Currency.
"We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them," said JPMorgan chief executive Jamie Dimon.
"Since these losses occurred, we have made numerous changes that have made us a stronger, smarter, better company."
However, JPMorgan signalled that it continues to encounter tough regulatory scrutiny on the case, dubbed the "London whale" for the location and the massive size of the global bank's soured derivatives bets.
"Litigation and other government investigations previously disclosed are ongoing," JPMorgan said in a Thursday securities filing. These include investigations by the US Commodities Futures Trading Commission (CFTC), the US Department of Justice and the Massachusetts Securities Division.
On Monday, the bank received a notice from the CFTC announcing it would recommend enforcement against the bank in connection with the "London whale" losses.
Also this week, the US Attorneys Office in New York indicted two former JPMorgan employees involved in the trades, Julien Grout and Javier Martin-Artajo.
The SEC's Canellos said that while the settlement ends the matter for JPMorgan, the agency's investigation is continuing with respect to individuals involved in the case.
Shares in JPMorgan, a member of the blue-chip Dow Jones Industrial Average, were 0.9 per cent lower in early trading.