JPMorgan Faces U.S. Criminal Probe Into Currency Trading

Big Banking news! JP Morgan is being investigated by the US Department of Justice, and other regulators. -LW


 By Hugh Son and Michael J. Moore  Nov 4, 2014 10:10 AM ET

 JPMorgan Chase & Co. (JPM) said it faces a U.S. criminal probe into foreign-exchange dealings and boosted its maximum estimate for “reasonably possible” losses on legal cases to the highest in more than a year. The shares fell in New York.

The firm is cooperating with the criminal investigation by the Department of Justice as well as inquiries by regulators in the U.K. and elsewhere, it said yesterday in a quarterly report. The largest U.S. bank said it might need as much as $5.9 billion to cover losses beyond reserves for legal matters, up $1.3 billion from the end of June, and the most since since mid-2013.

“In recent months, U.S. government officials have emphasized their willingness to bring criminal actions against financial institutions,” the bank wrote of the general legal environment. “Such actions can have significant collateral consequences for a subject financial institution, including loss of customers and business.”

Broken Benchmarks

Chief Executive Officer Jamie Dimon, 58, who led the New York-based firm through $23 billion in settlements last year, is contending with an international probe into whether traders at the biggest banks sought to profit by rigging currency rates. Citigroup Inc. (C) and Zurich-based UBS AG disclosed last week they also face criminal inquiries by the Justice Department into their foreign-exchange dealings. Citigroup cut third-quarter results to include a $600 million legal charge.

Photographer: Ron Antonelli/Bloomberg

The JPMorgan Chase & Co. headquarters in New York.

‘No Assurance’

“These investigations are focused on the firm’s spot FX trading activities as well as controls applicable to those activities,” JPMorgan said in its report. While the company is in talks to resolve the cases, “there is no assurance that such discussions will result in settlements,” it said.

JPMorgan slid 1.7 percent to $59.87 at 9:52 a.m., the most in more than two weeks and the worst performance in the KBW Bank Index. (BKX) The shares have gained 2.5 percent this year, compared with the 3.9 percent advance of the 24-company index.

Banks are facing foreign-exchange probes by authorities on three continents, people with knowledge of the situation have said. Richard Usher, JPMorgan’s chief currency dealer in London, left the company amid efforts to settle a U.K. probe into allegations of foreign-exchange rigging, people with knowledge of the moves said last month. He hasn’t been accused of any wrongdoing.

Holder’s View

JPMorgan booked $1.01 billion in legal expenses during the third quarter, tied “in large part” to the currency probes, Chief Financial Officer Marianne Lake said on Oct. 14. Cases could cost banks as much as $41 billion combined to settle, analysts at New York-based Citigroup, led by Kinner Lakhani, said last month.

Photographer: Jin Lee/Bloomberg

Marianne Lake, CFO of JPMorgan Chase & Co., at a Bloomberg Television interview in… Read More

The bank separately estimated that fourth-quarter sales and trading revenue will drop by about $300 million, or 8 percent, amid a push to simplify the company. Costs in the division will be lowered by about $200 million as the firm sells units including its physical commodities business as part of that effort, it said.

U.S. Attorney General Eric Holder announced in May that authorities were pursuing criminal cases against banks, showing that financial institutions aren’t too big to prosecute. The Justice Department later wrested guilty pleas — once viewed as a death penalty for a bank — from Credit Suisse Group AG (CSGN)’s main bank subsidiary for helping Americans avoid taxes, and from BNP Paribas SA (BNP) for handling banned transactions involving Sudan, Iran and Cuba.

SEC Directive

U.S. firms began disclosing estimates for possible legal losses after the U.S. Securities and Exchange Commission told finance chiefs in 2010 they should provide investor guidance “when there is at least a reasonable possibility” costs will be incurred, even if the risk is too low to require reserves.

JPMorgan said its estimated range, spanning no cost to as much as $5.9 billion as of Sept. 30, “involves significant judgment, given the varying stages of the proceedings.” It already has set aside money to cover several hundred legal proceedings, and it may boost those accruals further if additional expenses become probable.

To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net; Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net David Scheer, Steven Crabill

Source.

About Light Worker 29501

I am a Canadian Indigo adult, Reiki Master, and Bitcoin enthusiast. My background is in IT and fixing broken hearts. Since 2012, I have been investigating and debunking (where necessary) much of "truther" movement, particularly in the areas of banking and government. These days, I survive mostly on blog donations and non-corporate IT work. If you find value in my work, please consider making a small donation to patrick29501 [at] gmx.com at GoldMoney.com. (https://www.goldmoney.com/r/WIV0xy)

3 thoughts on “JPMorgan Faces U.S. Criminal Probe Into Currency Trading

  1. Ed Strain says:

    This article ignores the elephant in the room which is that the banks can simply print more money to pay their fines. Still no one goes to jail!

    Ed Strain

  2. Kettle investigates pot…News at 11.

Comments are closed.