JPMorgan hit with record £33m fine Daily
Mail | June 3, 2010
JPMorgan has been slapped with the largest fine ever issued by the Financial Services Authority and the watchdog also warns that it has 'several more' banks in its sights. The Wall Street firm, where Tony Blair works as an adviser, has been told to pay £33.32million for failing to keep client funds separate from its own in its futures and options business. As first reported by the Daily Mail last August, for an astonishing seven-year period JPMorgan failed to protect its customers by keeping their cash properly ring-fenced. An average of £6billion of clients' funds was wrongly mingled with the bank's cash on a daily basis, though at one point as much as £16billion was put at risk. If the bank had got into financial trouble or became insolvent, customers may have found it difficult to get their money back. The penalty comes as the FSA seeks to demonstrate that it is taking tough action against City firms, amid the threat that it could be abolished or emasculated by the Tories. Margaret Cole, the FSA's director of enforcement and financial crime, said JPMorgan had 'committed a serious breach of our client money rules by failing to segregate billions of dollars of its clients' money for nearly seven years'. The FSA added that it has other cases against banks in the pipeline, warning: 'This problem goes far wider than JPMorgan and firms need to sit up and take notice.' JPMorgan's breach is partly blamed on a failure by the bank to put adequate
controls in place following the merger of JPMorgan and Chase Manhattan
in 2000.
JPMorgan did not profit from the breach and notified the FSA as soon as the problem was discovered. The fine would have been £47.6million, had the bank not fully cooperated with the enquir. The bank refused to comment on the matter yesterday. - While the FSA had a victory against JPMorgan, it suffered a blow by losing an insider dealing case, after a jury acquitted the three individuals involved. Andrew King, former finance director of NeuTec Pharma, was accused of giving inside information on a bid by Novartis to lawyers Michael McFall and Andrew Rimmington. This is the first criminal case of insider dealing that the FSA has lost. It has 11 other prosecutions pending. The FSA said: 'Insider dealing cases are challenging to prove but these were serious charges and we considered that the evidence provided a proper basis to put the case before the jury for them to decide.' |