JPMorgan ordered to improve controls after "Whale" loss
WASHINGTON (Reuters) - U.S. banking regulators on Monday ordered JPMorgan Chase & Co (JPM.N: Quote) to tighten controls over the risk of trading losses and comply more closely with measures aimed against money-laundering by bank customers.
The Federal Reserve and the Office of the Comptroller of the Currency issued consent orders against the bank after it revealed billions of dollars in losses due to bad bets from a trader known as the "London Whale."
Regulators also ordered the bank to improve its compliance with the Bank Secrecy Act and anti-money laundering requirements.
The OCC began asking JPMorgan last April about its derivatives trades after press reports described contracts arranged by a London-based bank trader, nicknamed the London Whale by hedge funds for the size of the positions he took.
The company ultimately lost $6.2 billion on the trades, saw its reputation and stock price badly damaged, and for six months lost government approval to buy back its own stock.
Regulators said they identified deficiencies in the risk controls associated with that portfolio and in other processes at the bank's chief investment office responsible for the trades.
JPMorgan neither admitted nor denied the findings. The bank and its board agreed to submit an improvement plan to the Fed within 60 days, including taking risk outcomes into account for compensation for senior management.
The UK Financial Services Authority also issued a statement saying it is continuing to investigate the trading losses.
JPMorgan spokesman Joe Evangelisti said the company "has been working hard to fully remediate the issues" cited by the regulators over the losses. Continued...