JPMorgan Chase & Co. is set to face new actions from U.S. and U.K. bank regulators as early as Monday for a botched trade that cost the company more than $6.2 billion last year, according to two people familiar with the matter.
The U.S. Office of the Comptroller of the Currency and Federal Reserve, which have been investigating the loss, may release some of their findings Monday, three people familiar with the matter said. The U.K.’s Financial Services Authority, which has also been informally looking into whether traders intentionally mismarked some of their positions and tried to cover up their losses, may open an official investigation, according to one of the people.
Regulators have yet to punish JPMorgan for lapses in risk oversight that Chief Executive Officer Jamie Dimon, 56, has called “egregious.” It isn’t clear whether the Fed and OCC’s announcement will also include sanctions against the New York-based company, according to the people.
The OCC is preparing a cease-and-desist order requiring New York-based JPMorgan to fix internal controls that contributed to its wrong-way bet on credit derivatives, a person familiar with the matter said last month.
The chief investment office within JPMorgan’s national bank suffered from “inadequate risk management,” Comptroller of the Currency Thomas Curry said during U.S. Senate testimony in June.
“We have been focusing on potential gaps or deviations from accepted standards of risk management within that particular office and looking to see whether similar gaps exist in any other area,” Curry said.
The move to a formal enforcement proceeding by the FSA typically indicates the agency found sufficient evidence of financial rule violations.
The bank’s board of directors is also considering releasing an internal report that faults Dimon’s oversight of the division when the company announces fourth-quarter earnings on Jan. 16, two people with direct knowledge of the matter have said.
Joe Evangelisti, a spokesman at JPMorgan, Robert Garsson at the OCC, Barbara Hagenbaugh at the Federal Reserve and Christopher Hamilton at the FSA all declined to comment on the regulatory actions.
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