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Business

JPMorgan agrees to $100M settlement with CFTC

By
Mark DeCambre
Published Oct. 17, 2013, 12:14 a.m. ET

In a high-stakes regulatory showdown with Jamie Dimon, one Washington regulator blinked.

The Commodity Futures Trading Commission, which on Tuesday reached a $100 million settlement with Dimon’s JPMorgan Chase, could have held out for a stiffer fine, according to one of its commissioners.

The CFTC “should have taken more time to investigate whether [JPMorgan] is liable for a more serious violation, namely price manipulation,” according to Republican CFTC commissioner Scott O’Malia, the lone dissenter on the settlement.

As it turns out, JPMorgan did not admit to any wrongdoing, according to the settlement, and was not sued by the regulator.

The CFTC, sources said, had been threatening to sue the banking giant if it didn’t cave to harsher penalties — including an admission of wrongdoing.

The parties were at loggerheads over an agreement and JPMorgan officials weren’t willing to back down, sources added.

The regulator was probing Dimon’s London Whale trading fiasco, which led to a $6.2 billion derivatives trading loss.

As a part of the agreement, JPMorgan didn’t admit or deny wrongdoing but did admit to a set of acts related to its conduct in the trading scandal.

The agency voted 3-to-1 in favor of striking an agreement.

Jamie DimonAP

“The commission’s abbreviated investigation has failed to determine whether JPMorgan intentionally or recklessly manipulated the price of a particular type of credit default swap index,” O’Malia wrote in a statement.

The CFTC used new powers under Dodd-Frank regulator rules that enabled it to investigate manipulation without proving intent.

In a TV interview, CFTC Commissioner Bart Chilton indicated that the agency didn’t want to enter into a months-long protracted battle with the bank and was happy with its settlement.

Chilton suggested that the agency didn’t “want to spent another four, five months or another year” negotiating tougher terms with the bank.

The CFTC, which has been investigating the Whale case for more than a year, had been playing hardball with Dimon.

It opted not to be a party to a late-September settlement with other regulators that saw JPMorgan pay $920 million.