JP Morgan agrees to pay $920M over 'London Whale' losses

JPMorgan Chase & Co. chairman and CEO Jamie Dimon looks on while speaking at Simon Graduate School of Business at the University of Rochester's New York City Conference on May 3, 2012 in New York City. The bank's CIO Ina Drew retired on Monday in the wake of the $2.3 million dollar losses announced last week.
Mario Tama

JP Morgan Chase agreed to pay a whale of a fine to a host of regulatory agencies in Washington and London over a series of bad bets that ultimately cost the company more than $6 billion and severely damaged its reputation.

The bank will pay a total of $920 million in fees over the "London Whale" fiasco but senior executives seem to have avoided charges despite concerns that they misled investors about the risk of the trades, reported Bloomberg.

Two former traders were indicted this week over the multi-billion dollar loss, and Chief Executive Officer Jamie Dimon had his pay cut in half. 

The massive wagers made by trader Bruno Iksil, who became known as the London Whale because of the size of his bets, ultimately shaved $51 billion off the value of the company.

Iksil made huge bets on obscure credit derivative indexes that ended up souring. After JP Morgan executives realized the bets had gone bad, they were accused of trying to hide the losses, deceiving regulators and misinforming investors.

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In a rare move, the Securities and Exchange Commission allowed JP Morgan to admit fault in the risky trade despite a longtime policy that has allowed banks to "neither admit nor deny" any wrongdoing.

"JP Morgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses," co-director of the SEC's Division of Enforcement, George S. Canellos, said.

"While grappling with how to fix its internal control breakdowns, JP Morgan's senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company's problems and determine whether accurate and reliable information was being disclosed to investors and regulators."

The admission might open the bank up to more lawsuits from investors over the bad trading bet.

The payout will be split between US and UK regulators with the bulk of the cash going to JP Morgan's front-line regulator, Office of the Comptroller of the Currency, which will get $300 million.

The Federal Reserve and the Securities and Exchange Commission got about $200 million each.  The UK's Financial Conduct Authority got about $222 million.