NEW YORK, Sept. 19 (UPI) -- A culture of secrecy added to the problems that culminated in U.S. financial giant JPMorgan Chase's $920 million in fines announced Thursday, regulators said.
Billions of dollars in trading losses may have triggered the events that followed, but keeping the problems under wraps also contributed, authorities said.
The size of the losses in early 2012, frequently reported as about $6 billion, were the first secret, which managers at the bank attempted to hide from superiors, regulators said. Then bank executives ordered the bank's in-house investigation into the matter be kept "strictly confidential," the Securities and Exchange Commission said. Regulators said that meant executives were "impeding the exchange of information," The New York Times reported.
Executives then failed to bring the matter to the attention of the bank's board of directors in a timely manner, regulators said.
"While grappling with how to fix its internal control breakdowns, JPMorgan's senior management broke a cardinal rule of corporate governance and deprived its board of critical information," George Canellos, co-director of the SEC's enforcement division, said in a statement.
The bank was cited for a failure to correctly assess trading risks, poor quality control and inaccurate reporting. But regulator reports also focused on secrets -- not only in-house secrets but keeping facts from public authorities.
"Bank management must also ensure open and effective communication with supervisors so that we can effectively do our jobs. Anything less is unacceptable and will not be tolerated," Thomas Curry, the comptroller of the currency, said in a statement.
The bank agreed to settle the case with the Officer of the Comptroller of the Currency, which imposed a $300 million fine, and with the SEC, the Federal Reserve and the Financial Conduct Authority in London, each of which will be paid about $200 million, the Times said.
The bank did not settle the case with the Commodity Futures Trading Commission, which is investigating the bank on concerns of derivatives market manipulation, the Times said.
No bank executives have been charged with wrongdoing, but two traders, Javier Martin Artajo and Julien Grout, have been brought up on criminal charges.
A third trader involved in the case, Bruno Iksil, became widely known due to his nickname "the London Whale," which he was given because of the size of his market bets.
Iksil has avoided prosecution, as he has agreed to cooperate with authorities in the case, the Times reported.
