Blamed for failures in its internal control systems, the American bank had lost more than $ 6 billion because of too risky positions. At the heart of the matter is a French trader.

In front of the headquarters of JP Morgan Chase, in New York, in July 2012. (TIMOTHY A. CLARY / AFP)

In addition to the colossal losses it suffered in this affair, the American bank JP Morgan Chase will have to pay a fine of 920 million dollars (679 million euros) in the so-called “London Whale” case, we learned Thursday, September 19.

What is the “London Whale”?

The “London Whale” was the nickname given to Bruno Iksil, a French trader in a London unit of JP Morgan, due to his huge risky positions in credit derivatives. At the start of 2012, these positions had become too visible. The other traders had turned against him, forcing the bank to close out its positions.

JP Morgan CEO Jamie Dimon initially downplayed the “Whale” affair, calling it “Storm in a glass of water”. A few months later, however, the bank admitted that its losses amounted to more than six billion dollars.

What do we blame the bank for?

Regulators blame JP Morgan for failures in its internal control systems. The SEC also accused it of having skewed its financial results, and indicates in its press release that the bank “Admitted the facts” and admitted to having broken the law. The agreements announced Thursday with the four regulators are “A major step in the company’s efforts to put these problems behind it”, JP Morgan commented in a statement, where the bank assures that it “Continue to cooperate with ongoing investigations”.

“We accepted our responsibility and recognized our mistakes from the start, we learned the lessons and we worked to fix them”, assured the CEO of the bank, Jamie Dimon. Bruno Iksil himself made an agreement with the authorities guaranteeing him immunity in exchange for his cooperation. One of his subordinates, the French Julien Grout, and his Spanish superior Javier Martin-Artajo, on the other hand, were indicted by the American authorities. They accuse them of having concealed the losses of the bank in this affair. Javier Martin-Artajo was arrested in Spain at the end of August.

What are the details of the sanctions?

In the United States, JP Morgan has agreed to pay $ 200 million to the stock market policeman (SEC), $ 300 million to its regulator (OCC) and $ 200 million to the Federal Reserve (Fed), while in the United Kingdom, it will pay $ 220 million to the FCA stock market authority.

In a document published separately on the SEC website, the bank specifies that it is not immune to other fines. Indeed, the Department of Justice (DoJ), the regulator of derivatives markets (CFTC) and the financial authorities of the State of Massachusetts (Massachusetts Securities Division) continue to investigate.