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JPMorgan Admits Responsibility over ‘London Whale’

Thursday, September 19, 2013

JPMorgan Chase & Co. has admitted wrongdoing in the massive 2012 trading loss known as the "the London Whale."

The bank agreed to pay $920 million to settle charges, but in an unusual step, the bank accepted responsibility.

“For a very long time it was believed that companies would not settle with an admission of liability because of fear of the collateral litigation,” said Jordan Thomas, a former assistant director for enforcement at the Securities and Exchange Commission, who is now with the firm Labaton Sucharow.

Thomas said the new SEC Chairman, Mary Jo White, “has taken a strong stand and has indicated the Commission is going to seek admissions more often and I think that in cases where there has been significant misconduct they are more likely than ever to seek that.”

Two mid-level employees were charged last month by federal prosecutors for their role in the $6 billion loss, but senior bank officials have not faced charges.

Thomas says without eyewitnesses, prosecutors must rely on circumstantial evidence, which often points more strongly to lower-level employees.

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