London Whale: JP Morgan fined $100 million

JP Morgan will pay $100 million to settle with the US Commodities Futures Trading Commission over losses stemming from its “London Whale” trading debacle in 2012.

In a first, JP Morgan will admit that its traders acted “recklessly”.

The CFTC says the trades, which ultimately cost the bank $6 billion in losses, distorted prices in the market.

Last month, the bank agreed to pay $920 million to other regulators in the US and the UK over the bad trades.

The scandal arose from disastrous trades by former bank employee Bruno Iksil, who earned the nickname of the “London Whale” for his big bets on the financial markets.

David Meister, the head of enforcement at the CFTC, said in a statement that the traders tried “to <<defend>> their position by dumping a gargantuan, record-setting volume of swaps virtually all at once, recklessly ignoring the obvious dangers to legitimate pricing forces”.

The bank has found itself overwhelmed by mounting legal troubles lately.

Once the darling of Washington and Wall Street, it reported a rare quarterly earnings loss last week, mostly due to legal costs totaling $9.2 billion.

The bank lost $380 million during the quarter, compared with a profit of $5.7 billion in the same period last year.

JP Morgan says it has set aside a fund of $23 billion to deal with mounting legal costs relating not just to the “London Whale” trading debacle, but also to charges that the bank misled consumers and investors during the housing market collapse.

US media has estimated that JP Morgan could be negotiating a settlement of several billion dollars with a variety of US regulators.

An announcement of this settlement – surely the largest banking fine in US history – is expected to be announced soon.