JP Morgan agreed to pay $920 million in penalties and admitted violating securities laws last year as top managers withheld information from the board.
Senior executives had evidence by late April 2012 that traders in the chief investment office in London were pricing a derivatives portfolio in a way that reduced reported losses, the Securities and Exchange Commission said yesterday in a cease-and-desist order. The losses at the unit, which was supposed to help reduce risk and manage excess deposits, forced the bank to restate results for last year’s first quarter.
The episode shows that after weathering the worst financial crisis since the Great Depression executives at the biggest U.S. bank engaged in what watchdogs called a “pattern of misconduct” by maintaining poor internal controls, failing to keep their board informed and allegedly misleading regulators. The firm also is grappling with probes of its hiring practices in Asia and criminal inquiries tied to mortgage-bond sales and energy trading.
“The regulators were embarrassed, that’s why the fines are so big,” Paul Miller, an analyst with FBR Capital Markets in Arlington.
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