A spokesman for the City watchdog said: “Like the US Securities & Exchange Commission, we do not allow a firm to admit no liability. They have to admit this.
“While we cannot talk about individuals or potential individual action, we are working with UK and US bodies that are conducting criminal investigations into the roles of individuals.”
His comments came as JP Morgan Chase Bank was hit by huge fines over the so-called ‘London Whale’ trading scandal, where $6.2bn (£3.8bn) was lost because of what the FCA called a “high-risk trading strategy, weak management of that trading and an inadequate response to important information”. All this should have notified the firm of the huge risks present in the Synthetic Credit Portfolio.
The FCA fined JP Morgan Chase Bank £137.6m ($220m) for four breaches of its principles for business – principles 2, 3, 5 and 11 – which are the fundamental obligations firms have under the regulatory system. JP Morgan also agreed to settle actions brought by the SEC, which imposed a penalty of $200m. The SEC also required the firm to admit wrongdoing. The US Office of the Comptroller of the Currency imposed a $300m fine, while the Federal Reserve imposed a financial penalty of $200m.
According to a statement from the City watchdog, JP Morgan’s conduct “demonstrated flaws permeating all levels of the firm”, from portfolio level right up to senior management.
The FCA notice said that JP Morgan agreed to settle at an early stage of the FCA’s investigation, meaning it qualified for a 30 per cent discount. Without this, the fine would have been £196.58m.
Adviser view
Steven Farrall, adviser for Suffolk-based Williams Farrall Woodward, said: “These fines are pointless. It is a fraud and a criminal investigation, so why fine a company for an employee’s fraud? The FCA is not a police force. All the FCA has done is applied a huge tax on the customers of JPMorgan, as the only place the money comes from ultimately is its customers.”
