Categorized | Legal News

JPMorgan pays CFTC $100 million to settle London market manipulation allegation

The New York Times (10/17, Protess, Silver-Greenberg, Subscription Publication, 9.61M) reports that JPMorgan Chase has reached an agreement with the Commodity Futures Trading Commission (CFTC) under which the bank will pay $100 million and “make a groundbreaking admission of wrongdoing” to settle a probe into alleged market manipulation involving multibillion-dollar trading losses in London. The CFTC targeted JPMorgan for trading activity “so large and voluminous that it violated new rules under the Dodd-Frank Act,” and charged the bank “with recklessly ‘employing a manipulative device’ in the market for swaps,” which are financial contracts that “allowed the bank to bet on the health of companies like American Airlines.” The commission said JPMorgan sold “a staggering volume of these swaps in a concentrated period.”

The CBS Evening News reported that the bank agreed on Wednesday “to pay $100 million in a settlement with US government regulators over a series of risky trades that went bad in London,” and also “admitted its traders acted recklessly.”

The Washington Post (10/17, Douglas, 4.28M) reports that the settlement “is one of several the nation’s largest bank has reached with U.S. and British authorities over its handling of the disastrous ‘London Whale’ trading losses.” The “trading blunder has been an albatross that JPMorgan has fought hard to shed,” but, the Post notes, the Justice Department and the Massachusetts Securities Division “are still conducting separate probes into the derivative losses.”

The AP (10/17, Gordon) reports that the agreement “comes less than a month after JPMorgan, the nation’s largest bank, agreed to pay $920 million and admit fault in a deal with the Securities and Exchange Commission and other U.S. and British regulators.” The CFTC settlement “differs from the previous agreement because JPMorgan is formally acknowledging that its traders recklessly distorted prices to reduce the banks’ losses at the expense of other market participants.”

Bloomberg News (10/17, Brush, 1.91M) reports that JPMorgan spokesman Joe Evangelisti “said the bank neither admitted nor denied the CFTC’s legal conclusion that there was a violation, while admitting to ‘certain facts set out in the order.’” Dan Waldman, an attorney with Arnold & Porter LLP, said the admission of the facts “represents a middle ground between settlements where a party neither admits nor denies anything and those where a party admits to a violation of the law,” and “preserves the bank’s ability to defend against future civil claims related to the London trades.”

USA Today (10/16, Mullaney, 5.82M) reports that JPMorgan “still faces a criminal investigation of the trading episode by federal prosecutors. Two former JPMorgan employees involved in the London whale trades are also facing federal criminal charges and SEC civil charges.”

The Wall Street Journal (10/17, Patterson, Trindle, Subscription Publication, 5.91M) also reports on the settlement.

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