JPMorgan Fined £570m Over London Whale Loss

Wall St bank JPMorgan Chase has been fined a total of £570m over the £3.7bn 'London Whale' trading losses.

The announcement was made by regulatory bodies in the UK and US, settling some of the bank's potential liabilities arising from the huge derivatives loss last year.

The penalties include £137.6m imposed by the UK's City regulator, the Financial Conduct Authority (FCA).

The balance will be paid to the US Office of the Comptroller of the Currency, the Federal Reserve and Securities and Exchange Commission.

The regulators' penalties focus on failures in risk management and financial reporting systems.

FCA: JPMorgan undermined trust and confidence in UK markets

JPMorgan was also cited for failing to tell its board of directors and regulators about deficiencies in its risk management systems that had been identified by management.

The "London Whale" involved a London-based trader, Bruno Iksil, who racked up billions of pounds of bets on derivatives products which turned sour, and which were then concealed from the bank's top management by several colleagues who have since been fired.

US prosecutors charged two men - Julien Grout and Javier Martin-Artajo - last month with conspiracy and fraud for allegedly covering up the trading losses.

On Monday, a grand jury indicted both men.

The settlement covers only civil liabilities in the case

Mr Iksil has been told he will not face charges.

Tracey McDermott, the FCA's director of enforcement and financial crime said: "Maintaining the integrity of markets is a key part of our wholesale conduct agenda.

"We consider JPMorgan's failings to be extremely serious such as to undermine the trust and confidence in UK financial markets.

"There were basic failings in the operation of fundamental controls over a high risk part of the business.

"Senior management failed to respond properly to warning signals that there were problems in the CIO (Chief Investment Office). 

As things began to go wrong, the firm didn't wake up quickly enough to the size and the scale of the problems.

What is worse, they compounded this by failing to be open and co-operative with us as their regulator," she said.

Jamie Dimon, JPMorgan's chairman and chief executive, apologised for having initially dismissed the affair as "a tempest in a teapot" and this week announced significant changes to the firm's compliance and risk management functions, including the hiring of thousands of additional employees.

The bank has also clawed back millions of dollars in bonuses from employees over the trading losses.

It is the latest in a series of regulatory blows to hit Mr Dimon, lauded as the most successful banker on Wall Street for having stewarded JPMorgan through the financial crisis.

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