The UK’s financial regulator has fined the former head of JP Morgan Chase Bank’s chief investment office £729,900 ($1.1 million) for “failing to be open and co-operative” during its investigation into the “London Whale” trades.
Achilles Macris did not inform the Financial Conduct Authority (FCA) of concerns surrounding the synthetic credit portfolio, the regulator said in a statement. Macris’ role involved reporting directly to the UK regulators during the spring 2012 scrutiny.
JP Morgan Chase’s chief investment office used the portfolio to “engage in high-risk derivatives trading” and hid “hundreds of millions of dollars of losses,” according to a 2013 report by the US Senate Permanent Subcommittee on Investigations.
“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,” said Mark Steward, director of enforcement and market oversight at the FCA. “Regulators need open communication with firms so that better decisions can be made sooner. Mr Macris should have explained the position more squarely especially when he knew the synthetic credit portfolio’s losses had worsened.”
Macris failed to disclose the fund’s losses at a face-to-face meeting and a subsequent phone call with the regulator during the March-to-April period in question.
The FCA added that Macris had been granted a 30% discount to his fine, reflecting that “an agreement would have been possible at an earlier stage if the action had commenced on a different footing.”
The former executive launched a formal complaint against the regulator during its investigation, claiming he was too easily identifiable in a published report. Macris, who was not named in the report, won his case in May 2015.
As a result, the FCA agreed to grant Macris a higher “stage one” discount despite the investigation having reached “stage two,” CIO understands. An agency spokesperson declined to comment.
The FCA dropped its investigation into former JP Morgan Chase trader Bruno Iksil in July, citing a decision from its Regulatory Decisions Committee. Iksil initially faced various market misconduct charges for the £4.3 billion fiasco.
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