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JPMorgan Pays $920 Million to Settle London Whale Probes

by Dawn Kopecki, -- Sep 19, 2013

JPMorgan Chase & Co. (JPM), settling claims tied to a $6.2 billion trading loss, agreed to pay about $920 million in penalties and admitted it violated securities laws as top managers withheld information from the board.

The bank’s credit derivatives trading “constituted recklessly unsafe and unsound practices, was part of a pattern of misconduct,” the OCC [Office of the Comptroller of the Currency] said in a consent order. The company failed to ensure that examiners received important information about the trading strategy and problems in internal controls, the regulator said.

Fines such as those levied today will have “no impact” on the bank’s conduct, said James Cox, a professor at Duke University School of Law in Durham, North Carolina.

-- NOT!  Not really.
Fines such as those will have “no impact” on the bank’s conduct ...
-- That is quite the indictment -- NOT!  ... Not really.

Here's what the Federalities had to say about latest excesses by JPMorgan Chase:


#2013-140 (pdf)

In the Matter of:

JPMorgan Chase Bank, N.A. Columbus, Ohio



The Comptroller of the Currency of the United States of America (“Comptroller”), through his national bank examiners and other staff of the Office of the Comptroller of the Currency (“OCC”), has conducted examinations of JPMorgan Chase Bank, N.A., Columbus, Ohio (“Bank”). The OCC has identified deficiencies in the Bank’s trading oversight practices that resulted in losses of more than $6 billion, and has informed the Bank of the findings resulting from the examinations.

[... pg 2]

The Comptroller finds the following:

(1) The Chief Investment Office (“CIO”) conducted various trades on behalf of the

(2) Some of these trades involved a credit derivatives trading strategy.

(3) During the first quarter of 2012, the CIO’s credit derivatives trading strategy
significantly increased the CIO’s risk as measured by the Bank’s Value at Risk (“VaR”) model. This increase in risk resulted in breaches of certain limits established for the CIO.

(4) During this period, the Bank implemented a new VaR model, which had the effect of significantly reducing the CIO’s VaR measurement. While the process for measuring VaR changed, the VaR limits established under the previous model were retained. As a result, the CIO continued to increase its risk without continuing to exceed the VaR limits.

(5) During this period, the CIO’s credit derivatives trading strategy began to suffer substantial losses, and additional risk limits were breached.

(6) During this period, the CIO substantially increased the size of its credit derivatives positions. The Bank’s risk controls failed, and reporting was not adequate. The CIO was able to increase its positions and risk, and ultimately losses, without sufficiently effective intervention by the Bank’s control groups.

They go on ... as does the excessive Wall Street derivative risk-taking.  Have we learned nothing from the Mortgage Bundling crisis?

Apparently, the Derivative-Risk-takers are still uncontrolled and unaccountability to no one, except for the occasional "parking ticket fine" -- and those only for the most egregious offenses.

AKA, "Business as Usual" for the top one-tenth of a percent. Just another cost of business, just the price for another 6 Billion dollar bet, gone wrong. Using 'other people's money.'

[PS.  I heard on NPR today, that the $920 million penalty is equivalent to, how much JPMorgan will make in profits, in just 13 days.  AKA, Easy Money. ]

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