WASHINGTON Jan 14 U.S. banking regulators on
Monday ordered JPMorgan Chase & Co to tighten controls
over the risk of trading losses and comply more closely with
measures aimed against money-laundering by bank customers.
The Federal Reserve and the Office of the Comptroller of the
Currency issued consent orders against the bank after it
revealed billions of dollars in losses due to bad bets from a
trader known as the "London Whale."
Regulators also ordered the bank to improve its compliance
with the Bank Secrecy Act and anti-money laundering
The OCC began asking JPMorgan last April about its
derivatives trades after press reports described contracts
arranged by a London-based bank trader, nicknamed the London
Whale by hedge funds for the size of the positions he took.
The company ultimately lost $6.2 billion on the trades, saw
its reputation and stock price badly damaged, and for six months
lost government approval to buy back its own stock.
Regulators said they identified deficiencies in the risk
controls associated with that portfolio and in other processes
at the bank's chief investment office responsible for the
JPMorgan neither admitted nor denied the findings. The bank
and its board agreed to submit an improvement plan to the Fed
within 60 days, including taking risk outcomes into account for
compensation for senior management.
The UK Financial Services Authority also issued a statement
saying it is continuing to investigate the trading losses.
JPMorgan spokesman Joe Evangelisti said the company "has
been working hard to fully remediate the issues" cited by the
regulators over the losses.
Evangelisti added that complying with anti-money laundering
responsibilities "is a top priority."
"We have already made progress addressing the issues cited
in the consent orders, which contain no allegations of
intentional misconduct by the firm or any of its employees,"