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JPMorgan "London Whale" Settlement Costs $920 Million, Includes Admission of Wrongdoing

By Patrick Morris - Sep 19, 2013 at 11:50AM

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SEC required JPMorgan to admit wrongdoing, a rare move in such cases.

In a statement released today, JPMorgan Chase (JPM 1.66%) said its $920 million settlement with financial regulators over the so-called London Whale trades was "a major step in the firm's ongoing efforts to put these issues behind it."

JPMorgan reached settlements with the U.K. Financial Conduct Authority, the SEC, the Federal Reserve Board, and the Office of the Comptroller of the Currency for a total of $920 million related to the London Whale trades -- which led to more than $6 billion in losses for the company.

Today's announcement follows the news from last month that two former JPMorgan traders would face criminal conspiracy charges related to the incident. Both traders, through their lawyers, have denied any wrongdoing. JPMorgan said today that it "cooperated extensively" with the regulators and "continues to cooperate with ongoing inquiries, including the prosecutions of the two former CIO [chief investment office] employees."

In a statement issued today by the Securities and Exchange Commission, George Canellos, the co-director of the Division of Enforcement, said "JPMorgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses," and that "JPMorgan's senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company's problems."

As part of the settlement, the SEC required JPMorgan to acknowledge that it violated securities laws in failing to keep watch over the traders. That's a first for a major company since newly appointed SEC Chairman Mary Jo White insisted the agency change a longstanding practice. The SEC previously allowed most companies and individuals to agree to deals without admitting or denying wrongdoing.

In his statement today, Comptroller of the Currency Thomas J. Curry said, "The nearly $1 billion in combined penalties and the more than $6 billion in losses resulting from the failures in controls over derivatives trading serve as important reminders to all bankers of the importance of prudent controls, strong governance, and effective risk management."

The penalty payouts are broken out as follows:

Regulatory Body


Securities and Exchange Commission

$200 Million

Office of the Comptroller of the Currency

$300 Million

Board of Governors of the Federal Reserve System

$200 Million

U.K. Financial Conduct Authority

$220 Million

Jamie Dimon, the Chairman and CEO of JPMorgan, said in a statement today: "We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them. Since these losses occurred, we have made numerous changes that have made us a stronger, smarter, better Company."

The Justice Department is still investigating the bank for possible criminal violations.

-- Material from The Associated Press was used in this report.


Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool owns shares of JPMorgan Chase & Co.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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