The Cost of Doing Business

JPMorgan Agrees to Pay $920 Million in Fines Over Trading Loss

By BEN PROTESS and JESSICA SILVER-GREENBERG, The New York Times

September 19, 2013, 9:23 am

Extracting the fines and a rare admission of wrongdoing from JPMorgan Chase, the nation’s largest bank, regulators in Washington and London took aim at a pervasive breakdown in controls and leadership at the bank. The deal resolves investigations from four regulators: the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve and the Financial Conduct Authority in London.

But the bank has struggled to settle with another regulator, the Commodity Futures Trading Commission, which is investigating whether the bank’s trading manipulated the market for financial contracts known as derivatives. JPMorgan Chase disclosed on Thursday that the agency’s enforcement staff had recommended the filing of an enforcement action.

…

Under the deal with the S.E.C., which also brought civil cases against the traders, JPMorgan took the unusual step of acknowledging that it violated federal securities laws. That concession reverses a decade-long policy at the S.E.C. to allow banks to “neither admit nor deny” wrongdoing. It may also expose JPMorgan to private litigation from investors who will seize on the bank’s admissions.

For now, the bank agreed to pay $300 million to the comptroller’s office, and about $200 million to the S.E.C. and each of the other agencies. The comptroller’s office also cited the bank on Thursday for separate failings in the way it collected overdue bills from consumers and military members.

The fines, while collectively steep, fall in between what other banks have paid when settling with multiple regulators. And the fines can be seen as a reasonable trade-off for a bank seeking to move past the trading losses.

…

Even with the settlement on Thursday, JPMorgan’s regulatory headaches are far from over. On Thursday, both the comptroller’s office and the Consumer Financial Protection Bureau levied fines against the bank for its credit-card practices, including how the bank pursues customers who have fallen behind on their bills.

JPMorgan agreed to pay $80 million in fines to regulators over accusations that the bank duped its credit card customers into buying products pitched as a way to shield them from identity theft. Those products, regulators said, never materialized.

“Put simply, Chase was charging consumers for services that they did not receive,” said Richard Cordray, the director of the Consumer Financial Protection Bureau.

…

The regulators also faulted JPMorgan for how the bank collects debt from its customers. The federal actions stem from an investigation into debt-collection lawsuits the bank filed against its credit card customers from 2009 to 2011. As JPMorgan churned through a glut of overdue credit card bills and other loans, authorities said, the bank relied on faulty documentation to substantiate the amount owed by consumers. Often, the bank relied on outside law firms without double-checking their work.

The questionable debt-collection practices evoked some of the same tactics banks used to foreclose on homes during the mortgage crisis. Those problems – like robo-signing, where bank employees and outside lawyers churned through mountains of foreclosure documents without vetting them for errors – were at the center of a sweeping deal between the nation’s biggest banks and the comptroller’s office.

On Thursday, the regulators took aim at the lawsuits JPMorgan filed to recover money on unpaid bills. According to the comptroller’s office, JPMorgan relied on sworn legal documents that had not been reviewed for accuracy. The bank also flouted a federal law that governs how lenders collect overdue bills from military members, the comptroller’s office said.

JPMorgan Pays Small Fine For Lying To Regulators And Manipulating Market

By: DSWright, Firedog Lake

Thursday September 19, 2013 8:58 am

You had to see this coming. After lying to regulators, manipulating the market, and putting out fraudulent documents JPMorgan will pay a relatively small fine and move on. Because when the powerful repeatedly break the law the consequences are never very severe. If we stopped these Wall Street banksters from making criminal profits they might stop making criminal profits – then where would our economy be?

…

Well, as long as they learned their lesson. Never mind that JPMorgan reported $6.5 billion in profits last quarter. So of course a fine significantly less than 3 months profit will really make them shudder. It’s all about incentives people.

The one regulator that hasn’t taken a dive so far is the CFTC which has refused to settle unless JPMorgan admits market manipulation. Lets hope they don’t cave. Though it seems their regulatory colleagues just left them alone in the desert.

…

(W)hat is the penalty for that crime for 99% of Americans? Someone audits you or your business and you “fail to turn over significant information” to an auditor? I’ll give you a hint, it wouldn’t be a relatively small fine. Actually it would be a very large fine and possibly a government mandated visit to a correctional facility. But that’s what you get for not being rich enough to bribe Congress.