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Business 10th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell
Edition 10ISBN: 978-1259179396Business 10th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell
Edition 10ISBN: 978-1259179396 Exercise 17
JPMorgan Struggles to Repair Reputation
The London Whale scandal is making waves for JPMorgan. A trader known as the London Whale (because of his large portfolio and extensive trading) became the center of a trading loss that cost the bank more than $6 billion. Two traders in JPMorgan's London offices face charges from the U.S. and U.K. governments for allegedly trying to cover up the losses. While investigations have shown that top executives were not involved in a cover-up and were unaware of the bad trades, JPMorgan could face civil charges for lacking the oversight needed to prevent this kind of misconduct in its organization. Reports have indicated that one employee was in charge of ensuring proper conduct over these trades, but that the standards for oversight were so broad that they were ineffective.
As a result, the bank has paid more than $920 million in fines to several U.S. and U.K. regulators plus an additional $100 million to the Commodity Futures Trading Commission (CFTC). In addition, JPMorgan is battling this scandal while trying to come to terms with regulators on faulty mortgage securities that contributed to the 2008 financial crisis. JPMorgan paid record fines of about $13 billion, in addition to the $1 billion it paid to resolve U.K. and U.S. investigations into the Whale scandal. 6
Why is JPMorgan facing a civil suit if executives did not have knowledge of the wrongdoing?
The London Whale scandal is making waves for JPMorgan. A trader known as the London Whale (because of his large portfolio and extensive trading) became the center of a trading loss that cost the bank more than $6 billion. Two traders in JPMorgan's London offices face charges from the U.S. and U.K. governments for allegedly trying to cover up the losses. While investigations have shown that top executives were not involved in a cover-up and were unaware of the bad trades, JPMorgan could face civil charges for lacking the oversight needed to prevent this kind of misconduct in its organization. Reports have indicated that one employee was in charge of ensuring proper conduct over these trades, but that the standards for oversight were so broad that they were ineffective.
As a result, the bank has paid more than $920 million in fines to several U.S. and U.K. regulators plus an additional $100 million to the Commodity Futures Trading Commission (CFTC). In addition, JPMorgan is battling this scandal while trying to come to terms with regulators on faulty mortgage securities that contributed to the 2008 financial crisis. JPMorgan paid record fines of about $13 billion, in addition to the $1 billion it paid to resolve U.K. and U.S. investigations into the Whale scandal. 6
Why is JPMorgan facing a civil suit if executives did not have knowledge of the wrongdoing?
Explanation
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Being the largest bank in the United Sta...
Business 10th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell
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