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JP Morgan fined £570m over ‘London Whale’ trading losses

Wall Street Bank agrees to make payouts to four regulators in compensation for derivative losses in 2012 costing $6.2bn
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Top US bank JP Morgan Chase & Co has agreed to pay $920m (£570m) to four separate regulators in compensation for the $6.2bn trading losses it accumulated during the 'London Whale' debacle in 2012.

A little less than a quarter of that sum ($220m) will be paid to the UK’s Financial Conduct Authority (FCA) while the rest of the balance will go to the US Office of the Comptroller of the Currency, the Federal Reserve and Securities and the Exchange Commission.

The US bank’s London office was responsible for huge losses in derivative trades during the early part of 2012.

The four regulators are penalising J P Morgan for failures from portfolio level up to senior management.

The US bank is adjudged to have made fundamental errors in both its risk management and financial reporting systems.

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

Tracey McDermott, the FCA’s director of enforcement and financial crime said: “When the scale of the problems at JP Morgan became apparent, it sent a shock-wave through the markets.

“This is yet another example of a firm failing to get a proper grip on the risks its business poses to the market.”

She added: “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.”

Earlier today a survey announced that JP Morgan had retained its position as the top investment bank in the world on revenues for the first half of 2013.

The US investment bank reported revenues of $13.1b in 2013’s first half – a bigger figure raised than Goldman Sachs, Deutsche Bank or Bank of America Merrill Lynch.