Dec. 21 (Bloomberg) -- JPMorgan Chase & Co. will be the target of a regulatory enforcement order stemming from mistakes that led to at least $6.2 billion in trading losses, according to a person briefed on the situation.
The Office of the Comptroller of the Currency is preparing to issue a cease-and-desist order requiring the largest U.S. bank to fix internal risk controls that contributed to its wrong-way bet on credit derivatives, according to the person, who asked not to be named because the discussions aren’t public. Chief Executive Officer Jamie Dimon, 56, said in May that the firm’s strategy was beset by “errors, sloppiness and bad judgment.”
The timing of the enforcement is uncertain, the person said.
Joe Evangelisti, a JPMorgan spokesman, and Bryan Hubbard, an OCC spokesman, declined to comment on any potential enforcement actions, reported yesterday by the Wall Street Journal.
The faulty trades within the bank’s chief investment office -- associated with London-based trader Bruno Iksil, widely known as the London Whale -- may eventually cost more than $6.2 billion, Dimon has said.
That investment office within JPMorgan’s national bank suffered from “inadequate risk management, Comptroller of the Currency Thomas Curry said during U.S. Senate testimony in June.
‘‘We have been focusing on potential gaps or deviations from accepted standards of risk management within that particular office and looking to see whether similar gaps exist in any other area,’’ Curry said.
The U.S. Senate Permanent Subcommittee on Investigations is also probing the loss, and the panel’s chairman, Michigan Democrat Carl Levin, called it a ‘‘textbook’’ example of why regulators need to tighten the so-called Volcker rule to restrict banks from trading with their own funds.
In a banking industry risk report released yesterday by the OCC, the agency said this year’s ‘‘poor second quarter trading performance’’ for banks was due to the ‘‘well-publicized events’’ at JPMorgan.
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