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HindustanTimes Sat,29 Nov 2014

CFTC fines JP Morgan $100 mn over 'London whale' trades

AFP  Washington DC, October 16, 2013
First Published: 22:08 IST(16/10/2013) | Last Updated: 22:12 IST(16/10/2013)

US regulators today fined banking giant JP Morgan Chase $100 million for manipulating trade in the "London whale" trading debacle.

 
The US Commodity Futures Trading Commission said that JPMorgan had agreed to pay the civil penalty to settle the 17-month probe of the 2012 trading debacle that lost the bank $ 6.2 billion.
 
Shares in JP Morgan, a Dow component, were up 2.9% at $53.84 in late-morning trade in New York.
 
JP Morgan admitted that its traders "recklessly disregarded the fundamental precept on which market participants rely, that prices are established based on legitimate forces of supply and demand," the CFTC said in a statement.
 
The agency, which regulates trade in derivatives and futures contracts, said it was the first time it had used a new tool provided by the Dodd-Frank financial reform law that prohibits "manipulative conduct."  

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JPMorgan traders in the bank's London branch, manipulated the market for certain credit-default swaps by selling a staggering amount of them in a concentrated period, the CFTC said.
 
"As this case demonstrates, the Commission is now better armed than ever to protect the market from traders, like those here, who try to 'defend' their position by dumping a gargantuan, record-setting, volume of swaps virtually all at once, recklessly ignoring the obvious dangers to legitimate pricing forces," David Meister, the CFTC's enforcement director, said in the statement.
 
JPMorgan, the largest US bank by assets, has agreed to pay more than $1 billion in fines in recent weeks over the trading debacle. In mid-September, the bank said it would pay $ 920 million in fines to US and British regulators.
 
Federal prosecutors in New York have indicted two former JPMorgan employees involved in the trades, Julien Grout and Javier Martin-Artajo.
 
JPMorgan chief executive Jamie Dimon has vowed to beef up regulatory compliance at the bank, hiring some 4,000 employees to work on financial controls, boosting spending in this area by about $ 1 billion and providing about 750,000 hours of regulatory and compliance training.


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