September 20, 2013 - 12:22 AMT
PanARMENIAN.Net - U.S. bank JP Morgan Chase has agreed to pay four regulators $920mln relating to a $6.2bn loss incurred as a result of the "London Whale" trades, according to BBC News.
The settlement is the third biggest banking fine by U.S. regulators, and the second largest by UK regulators.
As part of the deal JP Morgan admitted violating U.S. federal securities laws.
Traders at JP Morgan's London office built up huge losses in derivatives trades at the beginning of last year.
Two former JP Morgan traders face criminal charges in the U.S. relating to the case. They deny charges of lying about the size of their trades in order to hide their mounting losses.
In a statement, the SEC said there had been failings in JP Morgan's internal controls and in senior management.
The regulator said the bank - whose chief executive Jamie Dimon once described the trading problems as a "tempest in a teacup" - had admitted the facts underlying the SEC's charges.
The Wall Street firm, one of the biggest investment banks in the world, is paying $300mln to the U.S. Office of the Comptroller of the Currency (OCC), and $200mln will go to both the Securities and Exchange Commission (SEC) and the U.S. Federal Reserve.
A further £138mln will be paid to the UK's Financial Conduct Authority as part of the global settlement. It said JP Morgan's conduct "demonstrated flaws permeating all levels of the firm: from portfolio level right up to senior management".
Tracey McDermott, the FCA's director of enforcement and financial crime, said the failings had undermined trust and confidence in the UK's financial markets.
"This is yet another example of a firm failing to get a proper grip on the risks its business poses to the market," she said. "Senior management failed to respond properly to warning signals that there were problems. As things began to go wrong, the firm didn't wake up quickly enough to the size and the scale of the problems. What is worse, they compounded this by failing to be open and co-operative with us as their regulator."
Separately, JP Morgan was fined $309mln by the newly-created U.S. Consumer Financial Protection Bureau (CFPB) for illegal credit card practices.
Approximately 2.1 million customers of the bank are expected to get refunds.
"At the core of our mission is a duty to identify and root out unfair, deceptive, and abusive practices in financial markets that harm consumers," said newly-installed CFPB director Richard Cordray in a statement. "This order takes action against such practices."