JPM is tipped to settle with several regulators for up to $800m over Bruno Iksil's London Whale $6.2bn legal loss (Photo: Reuters)
JPM is tipped to settle with several regulators for up to $800m over Bruno Iksil's London Whale $6.2bn legal loss (Photo: Reuters) Reuters

JPMorgan is expected to pay over half a billion dollars to multiple US and UK government agencies over the 'London Whale' derivatives scandal which led to the bank racking up $6bn in legal losses.

According to a range of unnamed sources who spoke to a raft of major new agencies, JPM is expected to stump up between $700m (£440m, €525m) and $800m in a coordinated settlement, in order to amalgamate several civil investigations.

The Securities and Exchange Commission, Federal Reserve, Office of Comptroller of the Currency and the UK's Financial Conduct Authority are all expected to iron out a single settlement with JPM.

In May 2012, Bruno Iksil, nicknamed the "London Whale" for his preference for huge trades, and his colleagues at the London unit of JPM's Chief Investment Office (CIO) lost $6.2bn through bad bets in a portfolio that was specifically designed to hedge the bank's risk exposure.

This prompted an investigation by several US authorities and the bank's CEO Jamie Dimon explained to the US senate why he didn't ensure that the CIO's risk managers adequately kept pace with the nature of the unit's business.

The appropriate representative at JPM has not returned a request for comment lodged by IBTimes UK at the time of publication.

Civil Investigations into Legal Losses

JPM is under several civil investigations by a raft of regulators for its role in the 'London Whale' scandal.

While the losses were legal, lax risk management controls and traders being encouraged to take increasingly huge risks are largely to blame for the loss of such huge sums in bad bets.

JPM revealed in a statement that it will rack up more than $1.5bn of additional legal expenses in the third quarter this year.

While the settlement is tipped to be imminent, several unnamed sources cited by the Financial Times say that the coordinated deal will exclude the Commodities Futures Trading Commission's (CFTC's) investigation into whether the investment bank manipulated a credit default index known as the IG9.

Sources claim that the probe centres on whether JPM rigged the index when it was trading credit derivatives during the 'London Whale' scandal.

Federal Reserve London