The London Whale settlement will cost JPMorgan Chase & Co. $150 million.
JPMorgan Chase & Co. has agreed to pay $150 million to settle a lawsuit filed by investors over $6.2 billion in losses caused by a trader nicknamed the “London Whale.”
A group of pension funds in Arkansas, Ohio, Oregon and the country of Sweden accused JPMorgan of intentionally hiding risks at its chief investment office in London. The bank had told investors the office was charged with managing risk but, in reality, it was doing trades to try to generate profit. Bruno Iksil, who made the trades for the bank, became known as the London Whale.
The lead plaintiffs included the Arkansas Teacher Retirement System, the Ohio Public Employees Retirement System, and the state of Oregon. They claimed they incurred tens of millions of dollars of losses because their fund managers were given “false and misleading information.”
The settlement, filed Dec. 18 in federal court in New York City, covers anyone who bought JPMorgan stock from April 13 to May 21, 2012. That’s when JPMorgan’s share price tumbled by about 25%, wiping out more than $40 billion of market value.
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Neither the London Whale nor any senior managers faced criminal charge in the wake of the 2012 scandal. Iksil’s former boss and a junior trader were indicted in the United States in 2013, but the charges weren’t related to the actual trades. Prosecutors alleged that they committed securities fraud by hiding the extent of losses from bank management. Both have maintained their innocence.
In July, the U.K. Financial Conduct Authority dropped efforts to pursue a fine and industry ban against Iksil, who is cooperating with authorities in exchange not being prosecuted.
Prior to the settlement, the U.S. Federal Reserve’s Inspector General issued a report saying regulators had bungled oversight of the JPMorgan unit where the losses took place. The report said examiners in New York spotted risks as early as 2008 but never followed up, prompting criticism that megabanks are too big to manage and regulate.
In all, JPMorgan has paid more than $1 billion to settle U.S. and British probes into London Whale losses.
JPMorgan has declined to comment on the settlement.
