JPMorgan Chase & Co will have to pay $920 million in fines — certainly no insignificant amount — to settle accusations that the bank's CEO once called “a tempest in a teapot.”
The announcement of the penalty Thursday is the conclusion of a probe into the “London Whale” scandal of 2012, in which the bank misrepresented multibillion dollar losses made by its traders. U.S. and UK regulators have since cited JPMorgan for having poor risk control and for mismanaging an internal investigation into the trade losses. According to the Securities and Exchange Commission, JPMorgan's senior management demanded so much secrecy in their investigation that they were “effectively impeding the exchange of information.”
“JPMorgan's egregious breakdowns in controls and governance put its millions of shareholders at risk and resulted in inaccurate public filings," commented George Canellos, a representative of the SEC. “At its core, today's case is about transparency and accountability, and JPMorgan's admissions are a key component in that message.”
Maybe so, but one still has to wonder how much effect the ruling will have on the traders in question. Bruno Iksil, the “London Whale” who gave the scandal its name has already made a deal with prosecutors. So far, two traders, Javier Martin-Artajo and Julien Grout, have been criminally charged.
Jamie Dimon, the bank's CEO, said the company has "accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them."
But the trouble isn't quite over for America's largest bank. JP Morgan still has to contend with an investigation from the Commodity Futures Trading Commission, which is investigating the bank for manipulating the market for derivatives.
Not a bright day for Wall Street.
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