View more on these topics

JP Morgan fined £572m over ‘London Whale’ trades

JP Morgan Chase Bank has been fined a total of £572m by UK and US regulators over the “London Whale” $6.2bn trading losses incurred by the bank.

The FCA has fined the firm £137.6m, the US Securities and Exchange Commission has imposed a fine of $200m (£124.4m), the Office of the Comptroller of the Currency fined the firm $300m, and the Federal Reserve levied a fine of $200m.

The FCA says the trading losses, which occurred in 2012, were caused by JP Morgan’s “high risk trading strategy, weak management of that trading and an inadequate response” to information which flagged the risks.

The UK regulator says JP Morgan’s trading strategy for its synthetic credit portfolio caused the size of its positions to grow so large it was at risk of substantial losses from small adverse market movements. 

JP Morgan assumed the amounts which indicated rules on risk limits had been breached were unreliable and doubted whether risk measurements were accurate.

When significant losses began to emerge last year, JP Morgan traders sought to hide the scale of the losses by mismarking positions, which went undetected due to flaws in valuation controls.

Ahead of publishing an earnings statement in the US in May 2012, senior mangement commissioned a review of synthetic credit portfolio valuations. The FCA says the review failed to uncover the extent of the valuation problems, and that senior management failed to act on the inconsistencies raised in light of the extent of the portfolio’s losses. 

As a result JP Morgan’s earnings statement in May overvalued the portfolio’s positions, and the company had to restate its earnings in July.

The FCA says during the first half of last year, JP Morgan failed to co-operate with the UK regulator and hid the extent of the losses as well as “numerous serious and significant issues” relating to to the synthetic credit portfolio.

FCA director of enforcement and financial crime Tracey McDermott says: ”When the scale of the problems at JPMorgan became apparent, it sent a shock-wave through the markets. We consider JPMorgan’s failings to be extremely serious such as to undermine the trust and confidence in UK financial markets.

“There were basic failings in the operation of fundamental controls over a high risk part of the business. Senior management failed to respond properly to warning signals and 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.”


FSCS starts extra payouts to Lifemark customers after recoveries

The Financial Services Compensation Scheme has started making payments to Lifemark customers whose claims were more than the maximum compensation limit. Consumers who bought Lifemark-backed products through Keydata Investment Services will be paid from recoveries made by FSCS, which became a major bondholder in Lifemark as part of a failed rescue attempt.  People who had […]


Phil Billingham: There are 2 types of people (which are you?)

No, not rugby fans and all the rest. Not as important as that. Financial services is a massive business. It encompasses the Industry of managing risk and money, and the profession of giving advice. But we hear the words ‘industry and profession’ used interchangeably. So we need to know who is doing what. And actually, […]

People on the move

John Beale has left the role of training and competence director at IFA network Pi Financial. He joins Brewin Dolphin in December as regional training & competency manager. Former Towry director Gauis Jones has joined Ashcourt Rowan. Jones, who spent 14 years with Towry, has replaced Chris Williams as chief executive of Ashcourt Rowan’s financial planning business. Lift […]


ICAEW calls for independent FCA appeals process

The Institute of Chartered Accountants of England and Wales is calling for the FCA to introduce an independent appeals process for regulatory decisions. Speaking at the recent ICAEW wealth management conference in London, ICAEW financial planning and advice manager John Gaskell said firms should be judged by an independent organisation. Firms and individuals can appeal […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. Well we know where FCA fine money goes – to the Government to help pay for our undermanned and underequipped armed services. It would be nice in the interests of transparency to see exactly how this considerable sum of money is used.

    One wonders how they reach the figures? Would they care to explain or are they just told that ‘we need another 20,000 bullets so please raise £x’.

    Anyone know what the US Regulators do with their fine money?

  2. Whoaaaa… its party time down at Canary wharf……
    I hear can here them from here!!!

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm