U.S. and UK regulators are expected to announce a civil settlement as soon as Thursday of their investigations into JPMorgan Chase & Co's "London Whale" derivatives loss, a source familiar with the matter said on Wednesday.
The settlement, which is expected to be for at least $700 million, would resolve several civil probes into the multibillion-dollar trading losses at the largest U.S. bank last year. Regulators, including the U.S. Securities and Exchange Commission and the UK's Financial Conduct Authority, are expected to be part of the settlement.
The New York Times reported that the fines would top $900 million.
The FCA and SEC declined to comment.
However, U.S. prosecutors are still investigating JPMorgan for potential criminal wrongdoing.
A settlement would mark a key step in JPMorgan's efforts to resolve its regulatory and legal troubles. The bank is facing separate probes by various government agencies into areas that include possible bribery in hiring practices in China and potentially fraudulent sales of mortgage securities.
Following the "Whale" scandal, Chief Executive Jamie Dimon faced a bruising battle with some shareholders to retain his chairman title and has since been under pressure to improve the bank's relationship with regulators.
Two former bank employees - Javier Martin-Artajo and Julien Grout - have already been charged with trying to hide some of those losses by deliberately giving inaccurate values to the sophisticated securities involved in the trades.
Bruno Iksil, the trader whose large bets earned him the nickname "London Whale," has signed a cooperation agreement with prosecutors and has not been charged with any wrongdoing.
(Reporting by David Henry in New York and Huw Jones in London; Editing by Gary Hill)
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The bank's chief investment office gambled on credit derivatives, <a href="http://www.huffingtonpost.com/2012/07/13/jpmorgan-chase-q02-earnings-2012_n_1670629.html" target="_hplink">losing $5.8 billion</a> (so far), and its trading desk may have tried to hide the losses from the home office. The bank says it is being sued by shareholders over the losses and has gotten subpoenas and requests for information from "Congress, the OCC, Federal Reserve, DOJ, SEC, CFTC, UK Financial Services Authority, the State of Massachusetts and other government agencies, including in Japan, Singapore and Germany."
Milan Swap Deal
The bank has faced <a href="http://www.bloomberg.com/news/2012-07-18/milan-swaps-prosecutor-seeks-ban-on-4-banks-from-government-work.html" target="_hplink">lawsuits and criminal investigations</a> over an interest-rate swap deal it made with the city of Milan, Italy, back in 2005. The bank settled a civil suit, but criminal charges are still pending against the bank and several employees, with hearings in the trial "occurring on a weekly basis since May 2010."
The bank and some of its executives are still being sued over the bank's relationship with the failed, fraud-ridden energy giant, more than a decade after its failure.
Speaking of Enron, the <a href="http://www.huffingtonpost.com/mark-gongloff/jpmorgan-chase-power-market_b_1647131.html" target="_hplink">Federal Energy Regulatory Commission is investigating</a> charges that JPMorgan manipulated power markets in California and the Midwest.
Credit Card Swipe Fees
The bank said in the filing that <a href="http://www.bloomberg.com/news/2012-08-09/jpmorgan-says-credit-card-swipe-case-cost-1-2-billion.html" target="_hplink">it will pay about $1.2 billion</a> to settle charges that it conspired with MasterCard and Visa to rig credit-card swipe fees.
The bank is being investigated by regulators all over the world for its <a href="http://www.huffingtonpost.com/2012/08/09/jpmorgan-chase-libor-subpoenas_n_1760015.html" target="_hplink">alleged involvement in manipulating Libor</a>, a short-term interest rate that affects borrowing costs for people, businesses and governments all over the world.
Madoff Ponzi Scheme
Several lawsuits have accused the bank of aiding and abetting Bernie Madoff's Ponzi scheme, the biggest in history. The Madoff bankruptcy trustee and others have also sued the bank to get back some Madoff clients' money.
The bank is under investigation by regulators for its <a href="http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CFEQFjAA&url=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fhalahtouryalai%2F2012%2F06%2F04%2Fjpmorgans-other-messy-problem-mf-globals-missing-money%2F&ei=Ui0lUNP7Eqe96QHP94CABA&usg=AFQjCNEJVDksnFTh3KP1uS3u73bLgoSfZQ" target="_hplink">relationship with the failed brokerage firm MF Global</a>. It is also being sued for allegedly aiding and abetting MF Global misuse of customer money.
Mortgage Backed Securities
The bank is being sued by hordes of investors for its bundling and selling of mortgage-backed securities packed with bad mortgage debt before the financial crisis. "There are currently pending and tolled investor claims involving approximately $130 billion of such securities," the bank says.
The bank was part of the big <a href="http://nationalmortgagesettlement.com/" target="_hplink">$25 billion settlement</a> with the government over mortgage-foreclosure abuses. But there are still several lawsuits and regulatory actions pending against the bank over its foreclosure practices.
The bank didn't mention this in its regulatory filing, but it is also involved in the failure of the Iowa brokerage firm Peregrine Financial. JPMorgan <a href="http://www.huffingtonpost.com/2012/07/12/pfg-customer-account-jpmorgan-chase_n_1668386.html" target="_hplink">holds some customer money for the firm</a>, and recently <a href="http://www.foxbusiness.com/news/2012/08/06/jp-morgan-objects-to-terms-proposed-by-peregrine-trustee/" target="_hplink">tussled in court</a> with the PFG bankruptcy trustee.