JPMorgan Chase Announces Settlements with the U.S. Department of Justice and the Federal Reserve Related to Foreign Exchange Activities
JPMorgan Chase & Co. (NYSE:JPM) today announced settlements with the U.S. Department of Justice (DOJ) and the Federal Reserve (Fed) relating to the Firm’s foreign exchange (FX) trading business. Under the DOJ resolution, JPMorgan Chase & Co. will plead guilty to a single antitrust violation and pay a fine of $550 million. Under the resolution with the Fed, the Firm will pay a fine of $342 million and has agreed to the entry of a Consent Order. The Firm has previously reserved for these settlements.
These settlements are in addition to agreements announced in November 2014 with the U.K. Financial Conduct Authority, the U.S. Commodity Futures Trading Commission and the U.S. Office of the Comptroller of the Currency relating to the FX trading business. Today’s resolutions, along with similar government settlements with other major banks announced today, call for certain remedial actions that are consistent with those required under the Firm’s prior settlements relating to FX. The Firm has already commenced significant efforts in this regard to help ensure it is operating according to the high standards that the company and its regulators demand. With today’s agreements and the remediation and other efforts it is making, the company is able to continue to serve its clients and does not anticipate future material constraints on its business activities. The DOJ agreement will be submitted to the court for its consideration. The Fed Agreement is effective immediately.
The conduct underlying the antitrust charge is principally attributable to a single trader (who has since been dismissed) and his coordination with traders at other firms. Jamie Dimon, Chairman and CEO of JPMorgan Chase, said: “The conduct described in the government’s pleadings is a great disappointment to us. We demand and expect better of our people. The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm. That’s why we’ve redoubled our efforts to fortify our controls and enhance our historically strong culture.”
The Firm continues to cooperate with still-pending investigations being conducted by other regulators relating to the Firm’s FX trading business.
JPMorgan Chase & Co. (NYSE:JPM) is a leading global financial services firm with assets of $2.6 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.
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FREQUENTLY ASKED QUESTIONS (FAQs)
1. What issues were resolved with today’s foreign exchange (FX) settlements?
- JPMorgan Chase & Co., along with other major banks, reached settlements with the U.S. Department of Justice (“DOJ”) and the Federal Reserve (“Fed”) relating to wholesale foreign exchange activities.
- Under the DOJ settlement, the firm agreed to plead guilty to a single violation of federal antitrust law and pay a fine of $550 million.
- Under the Fed settlement, the firm agreed to the entry of a Consent Order and will pay a fine of $342 million.
2. What conduct was cited in today’s settlements?
- The antitrust violation referenced in the plea agreement arises principally from the conduct of one trader between July 2010 and January 2013. As set forth in the plea agreement, that trader, who has been dismissed from the firm, improperly communicated with traders from other institutions in an attempt to improperly influence prices in the U.S. Dollar/Euro spot market pairing. The DOJ has alleged that the JPMorgan trader was already a part of the conspiracy when he joined the firm in 2010.
3. Why was JPMorgan Chase criminally charged?
- JPMorgan Chase is being held responsible for the conduct of its employee, as are the other financial institutions settling with DOJ today.
- This is consistent with the approach frequently taken by the DOJ’s Antitrust Division, which often resolves criminal matters through a guilty plea lodged at the parent/holding company level.
- Senior management was not involved.
4. Didn’t JPMorgan Chase already announce FX settlements?
- Today’s settlements are in addition to agreements announced in November 2014 related to this matter. Those were with the U.K. Financial Conduct Authority, the U.S. Commodity Futures Trading Commission and the U.S. Office of the Comptroller of the Currency.
5. Has JPMorgan Chase set aside money for today’s settlements?
- Yes. The firm has previously reserved for today’s settlements.
6. Is the trader cited in the charges still at the firm?
- No. He was dismissed.
7. Are there other FX related regulatory actions or litigation outstanding?
- Today’s agreements wrap up some of the most significant FX inquiries, though as set forth in our most recent 10-Q, certain investigations remain ongoing.
8. How will this guilty plea impact JPMorgan Chase businesses and the way we serve clients?
- The firm is able to continue serving its clients, and does not anticipate future material constraints on its business activities.
- We have been working with regulators to help ensure we have all necessary waivers and authorizations in place.
9. How has JPMorgan Chase improved controls to ensure a similar issue could not happen again?
- The firm has strengthened our controls over the past several years, including improving monitoring and surveillance; increasing training; adding staff; and limiting electronic chatroom participation.
10. With this settlement, are JPMorgan Chase’s major legal issues largely behind it?
- We have made significant progress resolving issues and improving controls. While we still face some significant litigation matters, which are detailed in our public filings, we expect litigation costs to normalize, or diminish, over time.
11. Is JPMorgan Chase still committed to the foreign exchange (FX) business?
- Yes. Foreign exchange is a core product for our global clients, and we remain firmly committed to it.
12. Did the trader’s activity in the U.S. Dollar/Euro spot market pairing affect customers’ foreign exchange rates in that pairing?
- The plea agreement does not allege a specific impact on rates.
13. Will any of the settlement money go to customers?
- This is a settlement between government agencies and JPMorgan Chase.
14. The agreement describes other relevant conduct; what does that include?
- The agreement contains a section called “Other Relevant Conduct” that describes certain other sales practices.
- This conduct is not the basis for any criminal charge.
- As part of the resolution with DOJ, and to ensure there are no ambiguities or misunderstandings with respect to our practices when acting as a dealer, on a principal basis, in the wholesale spot FX markets, we have agreed to provide a disclosure detailing those practices to spot FX customers and counterparties.
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