A Whale of a Tale: JPMorgan Chase Accepts Fault

In a legal and regulatory scandal once described by JPMorgan CEO Jamie Dimon as a tempest in a teapot, the bank agreed in October to pay a $100 million fine and admit wrongdoing, which is an unprecedented move the bank greatly sought to avoid.

In filing and settling the charges against JPMorgan Chase, the Commodity Futures Trading Commission (CFTC) stepped into a future sure to bring more aggressive action against businesses engaged in reckless and illegal financial conduct. JPMorgan Chase was accused of employing manipulative trading strategies with disregard to the consequences on legitimate market forces.

With a legal reserve of $23 billion set aside to handle incoming actions related to the debacle now known as the London Whale episode, the trouble for JPMorgan Chase is not ending anytime soon. Accused of massive market manipulation from its London office, the fiasco has led to the following actions:

• Securities violations against two traders by the Federal Bureau of Investigation (FBI) for cover-up of the financial losses
• Potential investigation of JPMorgan Chase on criminal charges by the Justice Department
• Recent report by JPMorgan Chase of a $380 million loss in the third quarter, with an associated $9.2 billion legal tab for related actions
• In September, JPMorgan Chase agreed to pay $920 million to settle claims brought in the case by the Federal Reserve and other agencies including Great Britain’s Financial Conduct Authority

Mr. Dimon now notes, “[s]ince these losses occurred, we have made numerous changes that have made us a stronger, smarter, better company.”

If you are facing regulatory investigation, seek aggressive, knowledgeable legal representation in New York.