Sept. 19 - JPMorgan Chase will pay a $920 million fine for the “London Whale” trading debacle, admitting wrongdoing in a big shift for Wall Street. Bobbi Rebell reports.
$920 million may be a big pile of cash, but what really grabbed headlines in JPMorgan's London Whale scandal settlement was the admission of wrongdoing. CEO Jamie Dimon saying "We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them, and worked to fix them." But while it was unprecedented- it was not a total mea culpa. Columbia Law School professor John Coffee: SOUNDBITE: JOHN COFFEE, PROFESSOR, COLUMBIA SCHOOL OF LAW (ENGLISH) SAYING: "I think that is an important step. Nonetheless, the wrongdoing admission has been carefully crafted. JPMorgan is admitting to having had inadequate internal controls, and not to having committed fraud. So, I think this was probably crafted and negotiated, because in this fashion it doesn't spell automatic liability." And there's more- in a separate case- regulators ordered JPMorgan to refund about $309 million to credit card customers who were billed for identity-theft protection services they did not receive, and must pay an additional $80 million in fines. JPMorgan still faces an unresolved criminal probe into the trading debacle that cost the bank $6.2 billion in losses in credit derivatives. The bank has also received legal notice that the U.S. Commodities Futures Trading Commission, aka the CFTC may soon take legal action regarding its derivatives trading. All the more reason for them to be more proactive: SOUNDBITE: JOHN COFFEE, PROFESSOR, COLUMBIA SCHOOL OF LAW (ENGLISH) SAYING: "I think that they are substantially moving beyond this, and they clearly are indicating that they are investing very heavily in compliance and new attempts to have stronger controls. All of that is desirable. Again, let me say I don't think this is the financial crime of the century. It is, rather, the financial blunder of the decade." Not to be lost in all this he adds, is that shareholders were double victims here, both absorbing the $6.2 billion trading loss, and now indirectly paying close to a billion dollars in the settlement.