OCC Issues Cease-and-Desist Against J.P. Morgan (JPM); U.K. FSA Continues Investigation
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The Office of the Comptroller of the Currency (OCC) announced today the issuance of a cease and desist order, by consent, against JPMorgan Chase, N.A. (NYSE: JPM), for unsafe and unsound practices and violations of law or regulation related to derivatives trading activities conducted on behalf of the bank by the Chief Investment Office (CIO).
The OCC found that the bank’s internal controls failed to identify and prevent certain credit derivatives trading conducted by the CIO that resulted in substantial loss to the bank, which has exceeded $6 billion. The OCC has conducted several targeted exams which found the following deficiencies related to the credit derivatives trading practices conducted by the CIO: inadequate oversight and governance to protect the bank from material risk, inadequate risk management processes and procedures, inadequate control over trade valuation, inadequate development and implementation of models used by the bank, and inadequate internal audit processes.
Concurrent with the OCC's enforcement action, the Board of Governors of the Federal Reserve System has issued a cease and desist order upon consent with the bank's parent company, JPMorgan Chase & Co.
For the full order, click here.
The U.K. Financial Services Authority (FSA) is said to still be investigating J.P. Morgan.
The OCC found that the bank’s internal controls failed to identify and prevent certain credit derivatives trading conducted by the CIO that resulted in substantial loss to the bank, which has exceeded $6 billion. The OCC has conducted several targeted exams which found the following deficiencies related to the credit derivatives trading practices conducted by the CIO: inadequate oversight and governance to protect the bank from material risk, inadequate risk management processes and procedures, inadequate control over trade valuation, inadequate development and implementation of models used by the bank, and inadequate internal audit processes.
Concurrent with the OCC's enforcement action, the Board of Governors of the Federal Reserve System has issued a cease and desist order upon consent with the bank's parent company, JPMorgan Chase & Co.
For the full order, click here.
The U.K. Financial Services Authority (FSA) is said to still be investigating J.P. Morgan.
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