Tags: JPMorgan | Settle | Whale | Probes

JPMorgan Said Poised to Pay $900 Million to Settle Whale Probes

Wednesday, 18 Sep 2013 08:23 PM

JPMorgan Chase & Co. is poised to pay about $900 million to settle U.S. and U.K. claims that lax internal controls led the bank to provide inaccurate information about last year’s record trading loss to the board, investors and regulators, people with knowledge of the matter said.

The bank is set to announce deals Thursday with four regulators over its handling of the trades by an employee known as the London Whale because his bets were so large, the people said, requesting anonymity because talks were private. The firm may also pay less than $80 million to settle two watchdogs’ probes tied to consumer lending practices, one person said.

Chief Executive Officer Jamie Dimon, whose pay was cut in half last year after the board said he was partially responsible for faulty oversight of the trades, told employees in a Sept. 17 memo the bank is making an “unprecedented effort” to simplify its business, overhaul controls and improve relations with regulators. The firm has been beset by inquiries this year, including the emergence last month of an investigation into its hiring practices in Asia as well as criminal probes tied to mortgage-bond sales and energy trading.

The package of penalties to be announced today is a message to banks “that regulators are going to really ratchet up the fines if the organization is deemed too big to manage in order to get the organization to simplify their structure,” said Charles Peabody, an analyst at Portales Partners LLC in New York.

Penalty Breakdown

The Office of the Comptroller of the Currency is imposing about $300 million in penalties, while the U.S. Securities and Exchange Commission, Federal Reserve and the U.K.’s Financial Conduct Authority each levy about $200 million in sanctions, one of the people said.

Spokesmen for New York-based JPMorgan, the OCC and FCA declined to comment. Spokesmen for the SEC and Fed didn’t immediately respond to messages after normal business hours.

JPMorgan restated results and its market value fell by almost $51 billion last year after disclosing the errant bets placed by Bruno Iksil, the so-called London Whale. The trading losses led to the indictment of two of his former colleagues this week. Iksil wasn’t accused of wrongdoing after agreeing to cooperate with prosecutors.

While the OCC and Fed censured JPMorgan this year and ordered it to strengthen internal controls, the regulators didn’t assess fines at the time.

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JPMorgan Chase & Co. is poised to pay about $900 million to settle U.S. and U.K. claims that lax internal controls led the bank to provide inaccurate information about last year's record trading loss to the board, investors and regulators, people with knowledge of the situation said.
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Wednesday, 18 Sep 2013 08:23 PM
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