JPMorgan Chase & Co., the largest U.S. bank, agreed to pay $100 million to resolve Commodity Futures Trading Commission claims that the company’s London traders last year deployed a reckless strategy in derivatives.
The accord, which stems from the bank’s chief investment office’s conduct on Feb. 29, 2012, brings JPMorgan’s settlements from the London Whale trades to more than $1 billion, the CFTC said Wednesday in a statement.
JPMorgan’s traders tried to defend their position in credit derivatives “by dumping a gargantuan, record-setting, volume of swaps virtually all at once, recklessly ignoring the obvious dangers to legitimate pricing forces,” David Meister, the CFTC’s head of enforcement, said in the statement.
The New York-based bank agreed in September to pay $920 million to resolve related U.S. and U.K. probes into its internal controls and handling of the trades, which inflicted at least $6.2 billion in losses on the bank last year.
The accords don’t end all of the investigations into the bets managed by Bruno Iksil, the trader known as the London Whale because his positions were large enough to move markets.
The selling cited by the CFTC was a “manipulative device” that disregarded consequences to the broader market, the agency said.
Joe Evangelisti, a spokesman for JPMorgan, said the bank neither admitted nor denied the CFTC’s legal conclusion that there was a violation, while admitting to “certain facts set out in the order.”
The admission of the facts represents a middle ground between settlements where a party neither admits nor denies anything and those where a party admits to a violation of the law, Dan Waldman, a Washington-based partner at law firm Arnold & Porter LLP, said in an interview. The accord preserves the bank’s ability to defend against future civil claims related to the London trades, he said.
“It does make it easier for them to defend future cases,” said Waldman, a former CFTC general counsel who represents exchanges, brokerages and investment funds in regulatory matters before his former agency and the Securities and Exchange Commission.