JPMorgan Agrees to $920 Million `Whale” of a Fine

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Sept. 19 (Bloomberg) -- Bloomberg News’ Dawn Kopecki and Paul Miller of FBR Capital Markets examine JPMorgan agreeing to pay $920 million in fines and admitted to violating federal securities laws relating to the “London whale trade.” They speak on Bloomberg Television’s “Market Makers.”

The london whale situation, we know how much the company lost.

It was not like anything happened that put the financial system in jeopardy.

Haven't shareholders are ready been hurt?

Charles peabody said it yesterday, if you cannot get your internal controls and check and you are so big you are too big to manage that the regulators will find you to deter you from doing this again, they want the large institutions to be running superbly.

They do not want them to be sloppy.

That is why they are paying a large sign.

They lied to regulators, misled them.

They also misled the board.

That is why j.p. morgan executives are being fined.

Or the company is.

Have spoken a lot to this -- open to you a lot about this.

You say it is a drop in the bucket.

When you think about the fact that they lied, there is no argument on that.

We have never upgraded it.

We think jpmorgan is a black box.

You do not think one person can effectively manage the risk inside the institution.

I have not put a buy on it even though it has recovered them the losses.

I am very concerned the risk controls are not in place.

It should be a bigger concern to investors.

Investors right now derail really care.

They feel it is a drop in the bucket.

I think regulators were embarrassed.

That is why the fine is so big.

I think risk controls probably need to be improved.

How much worse would have to get for investors to really care?

We know the justice department continues to investigate.

The news came out that the cftc issued a wells notice.

Looking into potential manipulation of the derivatives market.

It is a billion dollar fine there and here.

Really not that big of a deal.

What investors care about is does the earnings rate go away?

Does it impact how the business operates?

Right now it appears it has not.

When the earnings growth goes away, if they cannot return capital to shareholders tom of that is when they will care.

Did i hear you say regulators are really embarrassed, but is why the finest so big?

We know regulators are right there saying they have this under control but they did not.

When we talk to regulators it appears they were not happy about the loss.

Paul says a billion dollars here and there.

Comes down to something akin to the cost of doing business.

Is jpmorgan behaving beyond public statements?

We do not know exactly because they have so many things going on.

That is the other issue, the whale signed a very large spotlight on the bank.

Regulators were like what else are we missing?

In the statement it says some senior executives were bulking at signing off on earnings before they reported the first quarter of last year.

So it does not -- when would first quarter reporting been out?

It would have been on the q on may 10. after jpmorgan had said this is no big deal.

Yes.

Some senior executives were reluctant to sign under financial statements.

This was going on while the company was saying a tempest in a teapot.

This is why the fine was so large.

Also facing foreign corrupt processes that are criminal in nature.

There is just a whole host -- burke the energy market manipulation.

Cftc is looking at something different.

-- ferc.

So many investigations.

They have not saddled with the cftc.

How dangerous is that?

I do not know exactly the cftc is looking at it or what aspects.

This is a concern.

All of the banks have ongoing investigations.

Double and triple jeopardy.

Right now for the bigger banks, it is kind of the cost of doing business.

They are so vague, it is hard for one group of people, one individual to manage the aspects.

That is one of our concerns about not only jpmorgan, but all of these banks.

I think shareholders will put pressure on it.

Re the securities and exchange commission said it is still investigating this.

They're still looking at executives.

Still looking at traders.

The fbi still investigating this very trade.

The code director of enforcement -- the codirector of enforcement said they broke up cardinal rule of corporate governance.

Calling into question the truth of what the company is disclosing to investors.

Is this symptomatic of a broader pattern of misleading or of using investors?

During that quarter there was a lot of strange things going on.

They changed the risk measurement and did not tell anyone.

They said it was not material.

There was a lot of odd stuff that occurred.

If they did not inform the board and were holding stuff back during that time, you can say that is corporate governance.

That all goes back to me, you need to separate the chairman from ceos.

You really need to separate that out.

A lot of people do not necessarily feel like he is a

This text has been automatically generated. It may not be 100% accurate.

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