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

JPMorgan’s Head of CIO International failed to adequately communicate with the UK’s financial watchdog.

The UK Financial Conduct Authority (FCA) 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.

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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.

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After a series of positions were exposed to the value of credit default swaps (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.

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