Ex-J.P. Morgan Executive Fined $1 Million Over London Whale Trades -- Update
February 09 2016 - 09:17AM
Dow Jones News
By Jenny Strasburg
LONDON--A U.K. financial regulator on Tuesday fined a former
J.P. Morgan Chase & Co. executive more than $1 million for his
role in the so-called London whale trading debacle of 2012 and his
behavior during the subsequent investigation.
The Financial Conduct Authority said it imposed a GBP792,900
penalty ($1.1 million) against Achilles Macris, who oversaw the
unit responsible for trading that cost J.P. Morgan more than $6
billion. The regulator in a formal notice accused Mr. Macris of
"failure to be open" with authorities and "to disclose properly"
financial risks and other details of the trades.
In response, Mr. Macris said in a statement that he agreed to
the FCA settlement on the grounds that it didn't accuse him of
deliberately misleading authorities. He also said the settlement
didn't prohibit him from working in the "regulated sector," or the
financial industry, and added that he is still working to clear his
name.
"I have decided not to prolong what has been a drawn out and
burdensome process and have settled with the FCA," he said in the
statement.
Mr. Macris previously challenged FCA allegations that he
deliberately misled authorities or deliberately withheld
information he was obliged to provide based on his senior role at
J.P. Morgan. He has said that the FCA, in its quest to penalize
J.P. Morgan for the London whale episode, in 2013 effectively
accused him of wrongdoing without naming him or giving him a chance
to respond.
J.P. Morgan declined to comment on the FCA fine against Mr.
Macris. The bank previously paid $1 billion in fines for
securities-law violations tied to the losses on bad trades in its
London-based Chief Investment Office. Of that, the bank agreed in
2013 to pay GBP138 million to the FCA. J.P. Morgan acknowledged
wrongdoing as part of the settlements.
The size and risks of the positions earned the trader at the
heart of them the nickname "London whale."
Legal wrangling over the London whale debacle continues in the
U.K. The Supreme Court is expected later this year to hear
arguments over how the FCA characterized the role played by Mr.
Macris and other details in its final notice against J.P. Morgan.
Mr. Macris is seeking to have certain references to his actions
removed from the FCA settlement notice.
Tuesday's fine comes almost four years after details emerged
publicly about outsized positions inside J.P. Morgan. The FCA
notice Tuesday cited the April 6, 2012, Wall Street Journal article
titled "' London Whale' Rattles Debt Markets," which the FCA said
"drew attention to the size of those positions," which caused
mark-to-market losses of $412 million in a single day.
The FCA said the article highlighted for its investigators that
risks had worsened related to the positions by a London trader at
J.P. Morgan. The FCA said Mr. Macris at a meeting with the FCA the
previous week hadn't adequately provided "an update covering the
full extent of the difficulties" tied to the derivative positions
in question.
The FCA said in its notice against Mr. Macris that he failed to
provide adequate information about J.P. Morgan's losses and its
breaching of risk limits.
As a result of Mr. Macris's ongoing failures to communicate, the
FCA said, "the message delivered to the Authority was not an
accurate reflection" or the trades and risks involved.
"Consequently, Mr. Macris failed to deal with the Authority in an
open and cooperative manner," the FCA said in its notice.
The FCA said that the financial penalty against Mr. Macris was
discounted 30%, based on mitigating factors including J.P. Morgan's
clawback of Mr. Macris's benefits when he was terminated from the
bank, and the timing of the settlement agreement itself.
Write to Jenny Strasburg at jenny.strasburg@wsj.com
(END) Dow Jones Newswires
February 09, 2016 09:02 ET (14:02 GMT)
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