Former JPMorgan Executive Linked to ‘London Whale’ Fined $1.15 million by FCA

The UK Financial Conduct Authority (FCA) Financial Conduct Authority (FCA) The Financial Conduct Authority (FCA) is the largest financial regulator for all financial markets in the United Kingdom (UK).The UK regulator is responsible for the conduct of firms authorized under the Financial Services and Markets Act 2000. Moreover, the FCA is also responsible for the regulation of behavior in retail and wholesale financial markets, supervision of the trading infrastructure that supports those markets, and the prudential regulation of firms not regulated by the PRA. Its rol The Financial Conduct Authority (FCA) is the largest financial regulator for all financial markets in the United Kingdom (UK).The UK regulator is responsible for the conduct of firms authorized under the Financial Services and Markets Act 2000. Moreover, the FCA is also responsible for the regulation of behavior in retail and wholesale financial markets, supervision of the trading infrastructure that supports those markets, and the prudential regulation of firms not regulated by the PRA. Its rol Read this Term) has announced that it is imposing a fine on a former senior banking executive at JPMorgan. Achilles Macris, who was serving as the head of JP Morgan’s CIO (Chief Investment Office) International has been slapped with a £792,900 ($1.15 million) fine in relation to his business conduct when communicating with the UK watchdog.

According to the FCA, Macris has failed to be “open and co-operative” when communicating with the regulator the issue of the ‘London Whale’ trades at JPMorgan. Back in 2012, one of the portfolios of JPMorgan for which Macris was responsible had accumulated substantial losses, which were not appropriately reported to the UK financial regulator.

Known as the ‘London Whale’ trade, the Synthetic Credit Portfolio of JPMorgan suffered massive losses from the beginning of 2012. At the time, the main person of contact with the FCA at JPMorgan was Macris. According to the watchdog, he failed to disclose the seriousness of the situation at the time.

After a series of positions were exposed to the value of credit default Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term (CDS), JPMorgan’s trader Bruno Iksil accumulated a trading loss of well over $6 billion. The events prompted the bank and the regulators to review the business conduct of financial institutions and added to JPMorgan’s litigation costs at least $200 million.

It was only when the press picked up on the story of the ‘London Whale’ that Macris was forced to disclose the full extent to which the company had been affected by its exposure in the Synthetic Credit Portfolio.

FCA’s Director of Enforcement and Market Oversight, Mark Steward, stated on the matter: "A failure to communicate openly with us can affect the well-running of markets and cause unnecessary harm to investors, especially in times of financial stress or crisis. Mr Macris should have explained the position more squarely especially when he knew the synthetic credit portfolio’s losses had worsened.'

The FCA states in its announcement that the fine for Mr Macris has been discounted 30 per cent. The exceptional circumstances have prompted the regulator to reduce the original amount of £1.13 million.