09 December 2016
Visit aciworldwide.com

JPMorgan Chase slammed by regulators for control failings after botched derivatives bet

15 January 2013  |  5039 views  |  0 Wall street sign

JPMorgan Chase has been sanctioned by US regulators for failures in its risk management operations after it lost more than $6.2 billion on a single credit derivatives trade.

The Federal Reserve Board and the Office of the Comptroller of the Currency both issued cease and desist orders against the US moneycentre bank after finding deficiencies in the audit and finance functions both within and beyond its chief investment office (CIO) and in its anti-money laundering procedures.

The sanctions follow the disclosure of significant losses in a large synthetic credit portfolio that was managed by the CIO. The botched bet - made by UK big fish Bruno Iksil - had managed to wipe out $51 billion in shareholder value before alarm bells started to ring at the bank's head office in New York.

Among other things, the Fed identified deficiencies in risk management oversight, modelling assumptions, audit and finance reporting and escalation to senior management.

The OCC further found that the bank's BSA (bank Secrecy Act) compliance programme had "critical deficiencies" with respect to suspicious activity reporting, monitoring transactions, conducting customer due diligence and risk assessment, and implementing adequate systems of internal controls and independent testing.

Despite the criticism, JPMorgan Chase escaped with nothing more than a wrap on the knuckles. No fines were levied by the watchdogs and the bank didn't admit or deny wrongdoing in consenting to the regulatory orders.

The reputational damage to the bank and its chief Jamie Dimon is substantial, however, with more to come upon completion of ongoing investigations by the Securities and Exchange Commission, the FBI and the UK's Financial Services Authority.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

JPMorgan debuts new electronic client platform

JPMorgan debuts new electronic client platform

07 January 2013  |  9175 views  |  2 comments | 10 tweets | 4 linkedin
Banks pay $25m to settle New York electronic mortgage system claims

Banks pay $25m to settle New York electronic mortgage system claims

14 March 2012  |  5458 views  |  0 comments
JPMorgan lifts the lid on GPU-led performance breakthrough

JPMorgan lifts the lid on GPU-led performance breakthrough

11 August 2011  |  8347 views  |  0 comments
JPMorgan to cut costs and jobs by ditching trading platforms

JPMorgan to cut costs and jobs by ditching trading platforms

16 February 2011  |  16408 views  |  6 comments

Related company news

 

Related company information

JPMorgan Chase

Related blogs

Create a blog about this story (membership required)
Visit contisgroup.comVisit aciworldwide.comVisit VocaLink.com

Top topics

Most viewed Most shared
OCC to offer fintech firms bank charter statusOCC to offer fintech firms bank charter st...
7939 views comments | 25 tweets | 15 linkedin
China tops world fintech rankingsChina tops world fintech rankings
7890 views comments | 36 tweets | 30 linkedin
Guesswork alone can crack Visa card security - Newcastle UniversityGuesswork alone can crack Visa card securi...
7813 views 12 comments | 15 tweets | 27 linkedin
EBA bends under weight of PSD2 mandatesEBA bends under weight of PSD2 mandates
7614 views comments | 35 tweets | 47 linkedin
Fed Governor sounds warning on alternative credit scoring dataFed Governor sounds warning on alternative...
6645 views comments | 20 tweets | 23 linkedin

Featured job

to Six-Figure Base, Bonus, Benefits
London, UK

Find your next job