JP Morgan fined $920m for London Whale losses
JP Morgan is punished for a failure of oversight, after a British employee known as the London Whale was allowed to make risky bets for years, and cover up the losses.
America’s largest bank – JP Morgan Chase – has been hit with $920m in fines from authorities in the US and UK, as it struggles to make good the losses from one trader known as the London Whale.
London-based employee Bruno Iksil’s huge trades in derivatives earned him his nickname, and also lost the bank $6.2bn, including $2bn in one six week period.
Prior to his fall, he was known by another name – Voldemort, one profile says – because of the huge amounts of money he appeared to make and the awed regard his colleagues held him in.
Weak controls
When the scandal was exposed last year, JP Morgan’s market value fell by almost $51bn.
The bank was blamed for weak internal controls – allowing Mr Iksil to make the trades and then covering up the losses afterwards. Two employees have been charged with the criminal activity of falsifying records to hide the losses. Mr Iksil has not been charged but is working with authorities.
Four senior managers left and CEO Jamie Dimon took a 50 per cent pay cut.
JP Morgan has admitted wrong-doing as part of the penalty.
The penalties include $300m to the U.S. Office of the Comptroller of the Currency, $200m to Federal Reserve, $200m to the U.S. Securities and Exchange Commission and £137.6m ($219.74m) to the United Kingdom’s Financial Conduct Authority.
The bank has announced a move to bulk up its compliance teams in the last week – hiring 4,000 staff – and spent $1bn to beef up its control group, which has a range of oversight duties including monitoring trading risks, legal compliance and internal auditing.