JPMorgan Chase Admits Fault, Agrees to Pay $920MBy: Meaghan Ellis - September 19, 2013
While monumental corporate cases tend to drag on for years, this particular case involving JPMorgan Chase & Co. won’t be one of them. The United States’ largest bank has been ordered to pay an astronomical fine in the staggering amount of $920M, and no judge or jury was needed to provide a legitimate verdict. JPMorgan not only agreed to pay the fine, they even went so far as to admit fault.
In a rare admission, after only sixteen months of litigation, JPMorgan has admitted to careless moderation over trading which prompted a $6 billion loss that contributed to the distress of the financial sector last year. The company took full responsibility for its allowance of the risky trading practices that contributed to the devastating loss.
U.S. and United Kingdom regulators explained that JPMorgan’s poor judgment in trade monitoring over the London Whale operation gave traders the ability to distribute falsified, inflated values for specified transactions as a means of disguising significant losses as they mounted.
Forbes reports the estimated $920 million fine will be disbursed to a number of designated government entities, which include three U.S. Regulators, in addition to the U.K. Financial Conduct Authority. The collective, augmented amount will go down in history as one of the largest punitive fines ever levied against a financial institution. The Securities and Exchange Commission required the bank to admit fault in addition to paying a $200 million fine. The Office of the Comptroller of Currency imposed a $300 million fine, and the Federal Reserve Board applied another $200 million to the mounting list of punitive damages. Then, the British Regulator imposed an estimated $220 million fine as a means of reparation. This particular settlement is no ‘slap on the wrist.’ Even with the settlement calculated and agreed upon by JPMorgan, the New York-based banking empire is still undergoing investigation by the United States Justice Department to ensure no criminal violations should be imposed.
In a statement on behalf of JPMorgan, CEO Jamie Dimon said,
“We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them. We will continue to strive towards being considered the best bank – across all measures – not only by our shareholders and customers, but also by our regulators. Since these losses occurred, we have made numerous changes that have made us a stronger, smarter, better company.”
This statement was quite contradictory to his response in the spring of 2012. At that particular time, Dimon belittled the allegations, claiming the reports were “tempest in a teapot,” just weeks prior to the bank’s admission to losing billions. However, JPMorgan’s goal is to move forward in a more prosperous as expeditiously as possible.
JPMorgan has declined further comment.
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