Texas customers of JP Morgan Chase & Co. may have heard that the bank recently admitted to violating federal securities law. The company told the Securities and Exchange Commission that it did not adhere to securities compliance in the "London Whale" trading scandal, which arose in the bank's London office and ultimately resulted in over $6 billion in trading losses. The bank agreed that it would pay fines of $920 million as part of a settlement for the alleged systemic breakdowns in management and controls that led to the breach of securities law.
What was unusual about the regulatory settlement was that this marked the first time a major U.S. bank had admitted to wrongdoing following the crackdown on Wall Street misdeeds that arose after the financial crisis. In the past, the SEC has allowed companies and their major executives to settle such civil cases without admitting any wrongdoing, preferring such resolution over litigation that could prove costly and time-consuming. Under its new chairperson, however, the agency has been cracking down and becoming less amenable to settlements.
In a separate action on the same day that JP Morgan admitted its guilt, the company also agreed to pay out $389 million in refunds and penalties for charging customers illegally for services they never authorized or received.
Compliance with securities laws and regulations is of vital importance to the integrity of business institutions in Texas. An attorney with experience in securities law and reporting requirements may be helpful in providing assistance to companies that are subject to these regulations. This assistance may include help in handling initial public offerings and SEC filings.
Source: LA Times, "JPMorgan admits it broke securities laws in 'London Whale' case", Andrew Tangel and Jim Puzzanghera, September 19, 2013