Regulation  

FCA fines JP Morgan trader £793k over London Whale trades

FCA fines JP Morgan trader £793k over London Whale trades

The Financial Conduct Authority has fined one of the bankers involved in the “London Whale” case, for failing to be open and cooperative with the regulator.

Achilles Macris, the former head of JPMorgan’s CIO International, has been told to pay £792,900 for failing to inform the FCA about concerns with the Synthetic Credit Portfolio, which he was responsible for.

During a telephone call with the regulator in April 2012, Mr Macris was aware the position of the Synthetic Credit Portfolio had worsened and its losses had increased, but allowed an inaccurate impression to be given that there had been no material changes since a previous meeting with the FCA and that there were not wider causes for concern.

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In September 2013, JPMorgan was fined £137.6m as a result of the losses incurred by the portfolio, which totalled $6.2bn (£4.3bn) by the end of 2012.

These losses occurred as a result of what became known as the “London Whale” trades, which were conducted by traders Javier Martin-Artajo and Bruno Iksil, but ultimately overseen by Mr Macris.

Mark Steward, director of enforcement and market oversight at the FCA, said that a failure to communicate openly with us can affect the well-running of markets and cause unnecessary harm to investors, especially in times of financial stress or crisis.

“Regulators need open communication with firms so that better decisions can be made sooner.

“Mr Macris should have explained the position more squarely especially when he knew the Synthetic Credit Portfolio’s losses had worsened.”

At the beginning of 2012 the Synthetic Credit Portfolio began to suffer significant losses and in March the front office was told no further trades should be executed on the portfolio until further notice.

Despite Mr Macris’s attempts, the portfolio continued to suffer losses. A few days later he attended a meeting with the FCA at which CIO International and the portfolio were discussed.

The FCA said he did not provide it with information about the full extent of the difficulties the portfolio was facing, or ensure the regulator understood there were causes for concern.

During a phone call early in April, Mr Macris had another opportunity to provide information about concerns and the heightened response being adopted to address them, but did not do so.

In a statement, the FCA said: “At the very least a high level indication that there were causes for concern during the meeting, the call or at any time before the 29 April 2012 would have provided the authority with the opportunity to follow up with questions about the nature of the concerns and form its own assessment of the position.”

In 2013 Mr Macris complained that the FCA identified him in its highly critical assessment of the “London Whale” trading debacle without giving him the chance to defend himself.

This was taken to the Upper Tribunal and then to the Court of Appeal, where a judge agreed with Mr Macris.