JPMorgan faces US criminal probe into currency trading1 min read . Updated: 04 Nov 2014, 08:47 AM IST
The probe is focused on JPMorgan's spot FX trading activities as well as controls applicable to those activities
New York: JPMorgan Chase and Co. said it faces a US criminal probe into the firm’s foreign-exchange business and increased the upper end of its “reasonably possible losses" related to legal matters.
The lender is cooperating with a criminal investigation by the department of justice as well as inquiries by the Commodity Futures Trading Commission and regulators in Britain and elsewhere, the New York-based company said on Tuesday in its quarterly regulatory filing. Reasonably possible losses could be as much as $5.9 billion, the bank said, an increase of $1.3 billion since the end of June.
“These investigations are focused on the firm’s spot FX trading activities as well as controls applicable to those activities," according to the filing. JPMorgan “continues to cooperate with these investigations and is currently engaged in discussions with DOJ, and various regulatory and civil enforcement authorities, about resolving their respective investigations."
Banks are facing probes by authorities on three continents over alleged rigging of currency markets, people with knowledge of the situation have said. Citigroup Inc. and Zurich-based UBS AG disclosed last week that they also face criminal inquiries by the justice department into their foreign-exchange businesses. Citigroup restated third-quarter results to include a $600 million legal charge.
Richard Usher, JPMorgan’s chief currency dealer in London, left the bank amid efforts to settle a UK probe into allegations of foreign-exchange rigging, people with knowledge of the moves said last month.
Legal expense at JPMorgan in the period was $1.01 billion, tied “in large part" to the currency investigations, chief financial officer (CFO) Marianne Lake said on 14 October. The currency probes could cost banks as much as $41 billion to settle, analysts at New York-based Citigroup, led by Kinner Lakhani, said last month.
JPMorgan, the biggest US bank, slid 0.7% to $60.45 in extended trading at 6:11pm in New York. The shares gained 4.1% this year through the close of regular trading, trailing the 9.3% advance for the 85-company Standard and Poor’s 500 Financials Index.
Fourth-quarter sales and trading revenue will drop by about $300 million, or 8%, and costs in that division will be lowered by about $200 million because of the sale of units including the physical commodities business as part of what the bank has called a “business simplification" effort. Bloomberg