By Marcy Gordon
WASHINGTON: JPMorgan Chase & Co. will pay $920 million and has admitted that it failed to oversee trading that led to a $6 billion loss and renewed worries about serious risk-taking by major banks.
U.S. and U.K. regulators said Thursday that the largest U.S. bank’s weak oversight allowed traders in its London office to assign inflated values to transactions and cover up huge losses as they ballooned. Two of the traders are facing criminal charges of falsifying records to hide the losses.
The combined amount JPMorgan Chase is paying three U.S. regulators and the U.K. Financial Conduct Authority adds up to one of the largest fines ever levied against a financial institution.
The Securities and Exchange Commission fined the bank $200 million and required a rare admission of wrongdoing. The Federal Reserve Board imposed a $200 million penalty, while the Office of the Comptroller of the Currency set a $300 million fine. The British regulator fined the company $220 million.
The U.S. Justice Department is still investigating the bank for possible criminal violations.
New York-based JPMorgan Chase called the settlements “a major step” in its efforts to put its legal problems behind it. The bank said it cooperated fully with all of the agencies’ investigations and continues to cooperate with the Justice Department in its criminal prosecution of the two former traders.
“We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them,” CEO Jamie Dimon said in a statement. “We will continue to strive toward being considered the best bank — across all measures — not only by our shareholders and customers, but also by our regulators.”
The trading loss that surfaced in April 2012 shook the financial world and damaged the bank’s reputation. Chase was one of the few financial institutions to come through the 2008 financial crisis without suffering major losses.
The fallout even ensnared Dimon, who initially dismissed reports of the losses as a “tempest in a teapot.” He later acknowledged the magnitude of the losses, admitted to Congress that the bank failed in its oversight and took a multi-million-dollar pay cut.
Three employees in the London office were fired. The episode also led to the resignation of Ina Drew, the former chief investment officer overseeing JPMorgan’s trading strategy.
Federal prosecutors in New York filed criminal charges last month against Javier Martin-Artajo and Julien Grout.