NEW YORK – JPMorgan Chase has agreed to pay at least $750 million to resolve U.S. and British regulatory probes of its record trading loss last year, people with knowledge of the negotiations said.
The bank is seeking to settle as many inquiries as possible before the third quarter ends Sept. 30, the people said, asking not to be identified because the talks are private. Chief Financial Officer Marianne Lake told investors last week that the quarter’s addition to legal reserves would “more than offset” about $1.5 billion of consumer reserve releases.
The bank’s bad bets on derivatives, placed by British trader Bruno Iksil, prompted authorities on two continents to open investigations into the firm’s controls and disclosures last year as losses surpassed $6.2 billion. The Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve and Britain’s Financial Conduct Authority are planning to sanction the New York-based lender, sources said.
Some settlements might be announced as early as this week, and total penalties could change, one of the people said. Iksil, who became known as “the London Whale” because his trading book was so large, agreed to testify against his colleagues after U.S. prosecutors promised not to charge him.
U.S. Attorney Preet Bharara in Manhattan brought charges last month against Iksil’s former boss, Javier Martin-Artajo, and a junior trader, Julien Grout, for allegedly conspiring to hide hundreds of millions of dollars in losses. Bharara and state attorneys general, who are running parallel inquiries, might levy separate penalties against the bank later.
Spokesmen for the company, SEC, OCC, Fed and FCA declined to comment on the settlement talks. A spokesman for Bharara didn’t respond to messages seeking comment.
The Wall Street Journal reported Aug. 27 that the penalties were expected to total $500 million to $600 million.