The U.K. Financial Conduct Authority (FCA) announced on Monday that it has fined a former JPMorgan executive £792,900 (US$1.1 million) for failing to be open and co-operative with the U.K. regulator amid growing concerns about the firm’s synthetic credit portfolio in 2012, an episode know as the London whale.
By not informing the regulators about the deterioration in its large trading position, Achilles Macris, former head of CIO International for JPMorgan Chase Bank, N.A. in London, “failed to meet the standards expected of an approved person,” the FCA says in a statement.
JPMorgan’s synthetic credit portfolio began to suffer significant losses in 2012, and the FCA met with Macris a couple of times to discuss the portfolio, the regulator says. However, he didn’t alert the regulator to the full extent of its difficulties, the FCA adds. The firm ended up recording US$4.4 billion dollars in losses on the portfolio, and, following an internal review, it closed down that business.
“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,” says Mark Steward, director of enforcement and market oversight at the FCA, in a statement. “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 and the FCA settled the case, earning him a 30% discount on the financial penalty. Without the discount, the penalty would have been US$1.6 million.