To
settle charges in the “London Whale” trading scandal, JPMorgan Chase admitted
wrongdoing and will pay three government agencies $920 million in penalties.
The
Securities and Exchange Commission charged JPMorgan with misstating financial
results and lacking effective controls to prevent its traders from overvaluing
investments to hide hundreds of millions of dollars in trading losses.
The
SEC
previously charged two former JPMorgan traders with committing fraud to
hide the massive losses.
“JPMorgan failed to keep watch over its traders
as they overvalued a very complex portfolio to hide massive losses,” said
George S. Canellos, co-director of the SEC’s Division of Enforcement. “While
grappling with how to fix its internal control breakdowns, 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 and
determine whether accurate and reliable information was being disclosed to
investors and regulators.”
JPMorgan
has agreed to settle the SEC’s charges by paying a $200 million penalty and
publicly acknowledging that it violated the federal securities laws.
As
part of a coordinated settlement, three other agencies also announced
settlements with JPMorgan Thursday: the Federal Reserve, Office of the
Comptroller of the Currency, and U.K. Financial Conduct Authority. JPMorgan
will pay a total of about $920 million in penalties in these actions by the SEC
and the other agencies.
A second set of settlements includes $80
million for billing credit-card customers for identity-theft protection
services that they never received. The deals were made with the OCC and the Consumer Financial Protection Bureau.
Copyright 2013, Rita R. Robison, Consumer Specialist
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