US bank JPMorgan Chase has been fined £137.6 million for trying to conceal millions of pounds of losses in the ‘London Whale’ trades.
The market called the trades ‘London Whale’ because of the massive scale of the money involved.
The Financial Conduct Authority claims the banks £6.2 billion losses were badly managed and that managers deliberately tried to conceal the details from regulators.
The bank’s traders mismarked positions in the market and other fabrications.
To counter the problems, the bank increased trading limits without analysing the causes leading to the losses, making the position worse.
At one stage, said the FCA, the bank’s position was so precarious that a small shift in the market could have undermined the bank and the markets.
Risk to financial markets
Tracey McDermott, the FCA’s director of enforcement and financial crime said: “The scale of the losses at the bank eventually became apparent, sending a shock-wave through markets. The bank’s failings undermined the integrity of the British financial markets and we believe the failings of the managers were very serious.
“This is another example of a financial institution not understanding how their actions posed a risk to the markets.
“Bad management started at the bottom and went to the very top. Senior managers just could not believe the size of their losses and ignored warning signals. The bank did not act quickly enough to what was going on, and worse, were not co-operative with regulators.”
The problems came to light during May 2012.
Regulators in America also imposed fines totalling £437 million on the bank for the same breaches.
Warnings about bogus advisers
The FCA has also issued two warnings about bogus firms posing as regulated financial advisers:
- Epiq Systems (cloned firm)
- Venta KPO Services LLC
- ICMarkets (cloned firm)
- Solicitors Financial Centre Limited (cloned firm)
- Itrade Capital Markets Limited (cloned firm)
- Waterman Wealth Management
- Objective Returns (Cloned firm)
- DT Group Business Solutions
- Direct Mergers & Acquisitions Inc
Dealing with an unregulated firm
If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.
Checking if a firm is regulated
Go to the Financial Services Register to check if a firm is regulated in the UK.
Reporting a suspected bogus adviser
Find out how to report unauthorised advisers on the FCA web site
