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JPMorgan Whale Fines Said to Reach at Least $750 Million

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JPMorgan Said to Agree to at Least $750 Million in Whale Fines
The offices of JPMorgan Chase & Co. stand in London. The bank’s bad bets on derivatives prompted authorities on two continents to open investigations into the firm’s controls and disclosures last year as losses surpassed $6.2 billion. Photographer: Simon Dawson/Bloomberg

Sept. 16 (Bloomberg) -- JPMorgan Chase & Co. has agreed to pay at least $750 million to resolve U.S. and U.K. regulatory probes of its record trading loss last year, people with knowledge of the negotiations said.

The bank is seeking to settle as many inquiries as possible before the third quarter ends Sept. 30, the people said, asking not to be identified because the talks are private. Chief Financial Officer Marianne Lake told investors last week that the quarter’s addition to legal reserves would “more than offset” about $1.5 billion of consumer reserve releases.

The bank’s bad bets on derivatives, placed by U.K. trader Bruno Iksil, prompted authorities on two continents to open investigations into the firm’s controls and disclosures last year as losses surpassed $6.2 billion. The U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve and the U.K.’s Financial Conduct Authority are among watchdogs planning to sanction the New York-based lender, the people said.

Some settlements may be announced as early as this week, and total penalties may yet change, one of the people said. Iksil, who became known as the London Whale because his trading book was so large, agreed in June to testify against his colleagues after U.S. prosecutors promised not to charge him.

Parallel Inquiries

U.S. Attorney Preet Bharara in Manhattan brought charges last month against Iksil’s former boss, Javier Martin-Artajo, and a junior trader, Julien Grout, for allegedly conspiring to hide hundreds of millions of dollars in losses. Bharara and state attorneys general, who are running parallel inquiries, may levy separate penalties against the bank later, the people said.

Spokesmen for the company, SEC, OCC, Fed and FCA declined to comment on the settlement talks. A spokesman for Bharara didn’t immediately respond to messages seeking comment.

The Wall Street Journal, citing people close to the situation, reported Aug. 27 that the penalties were expected to total $500 million to $600 million.

JPMorgan climbed 1.2 percent to $53.22 at 3:27 p.m. in New York. The shares have gained 21 percent this year, trailing the 25 percent advance for the 24-company KBW Bank Index.

To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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