Misleading CDO Investments
Quick Stats
- JP Morgan fined $153.6 million
- Settled on 6/21/2011
- Case Details
The SEC settled with JP Morgan after it was discovered that the company misled investors on the complexity of a number of CDOs that were being offered. Specifically, the firm failed to notify investors that it had taken short positions in more than half of the assets bundled in said CDOs. The company did not admit to any wrongdoing or deny the allegations, but it agreed to pay $18.6 million in disgorgement, $2 million in prejudgment interest, and $133 million as a penalty. It was also required that the company change how it reviews and approves certain mortgage securities.
Anticompetitive Conduct in Municipal Bonds
Quick Stats
- JP Morgan fined $228 million
- Settled on 7/7/2011
- Case Details
JP Morgan settled an anticompetitive case with the U.S. Department of Justice (DOJ) in which it was forced to admit wrongdoing and knowledge of its illegal actions. “By entering into illegal agreements to rig bids on certain investment contracts, JPMorgan and its former executives deprived municipalities of the competitive process to which they were entitled” said Assistant Attorney General Christine Varney of the case. The charges stemmed from actions the company took from 2001 to 2006.
Foreclosure Abuses and “Robo-Signing”
Quick Stats
- JP Morgan fined $5.29 billion
- Settled on 2/9/2012
- Case Details
This gargantuan settlement came as the DOJ fined the five largest mortgage servicers in the nation. The entire suit was for $25 billion and was centered around “robo-signing” affidavits in foreclosure proceedings, “deceptive practices in the offering of loan modifications; failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court.” All banks involved, including JP Morgan, have until 2/9/2015 to comply with the settlement [see also The Unofficial Dividend.com Guide to Being an Investor].
More Mortgage Misrepresentation
Quick Stats
- JP Morgan fined $269.9 million
- Settled on 11/16/2012
- Case Details
Settled with the SEC, this case focused on JP Morgan misstating the delinquency status of mortgage loans that were collateral for residential mortgage-backed securities in which JP Morgan was the underwriter. It was found that investors lost $37 million on undisclosed delinquent loans. “Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed” said Robert Khuzami, Director of SEC’s Division of Enforcement.
Improper Foreclosures Pt. 2
Quick Stats
- JP Morgan fined $1.8 billion
- Settled in 01/2013
- Case Details
Continuing from the 2/9/2012 fine, JP Morgan tacked on another $1.8 billion to its already massive fine of $5.29 billion, totaling just over $7 billion. Combined, it is the company’s largest fine ever up to that point. That record would not stand for long, as the latter half of 2013 had other plans for the financial blue chip.
Electricity Trading Scandal
Quick Stats
- JP Morgan fined $410 million
- Settled on 7/30/2013
- Case Details
This fine was brought on by the Federal Energy Regulatory Commission (FERC) as it was discovered that JP Morgan was manipulating energy markets in California and the Midwest. In total, $125 million of unjust profits were returned and $285 million came as a civil penalty to be sent back to the U.S. Treasury.
Illegal Credit Card Practices
Quick Stats
- JP Morgan fined $389 million
- Settled on 9/19/2013
- Case Details
This fine was the result of JP Morgan deceiving customers into signing up for costly, unnecessary services when opening a new credit card. Broken down, $309 million of that figure was dedicated to repaying consumers, there was a $60 million civil penalty, and a separate $20 million penalty from the Consumer Financial Protection Bureau.
The London Whale
Quick Stats
- JP Morgan fined $920 million
- Settled on 9/19/2013
- Case Details
One of the most infamous cases over the last few years is the “London Whale,” which refers to two former JP Morgan traders who committed fraud to cover up massive losses (approximately $6 billion) in a trading portfolio. “JPMorgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses” said George S. Canellos, Co-Director of the SEC’s Division of Enforcement. The SEC slapped JP Morgan with the fine and also forced the firm to admit to wrongdoing.
The Fannie and Freddie Fines
Quick Stats
- JP Morgan fined $5.1 billion
- Settled on 10/25/2013
- Case Details
The Federal Housing Finance Agency (FHFA) acted as a conservator for Fannie Mae and Freddie Mac in this settlement. The fine included a $4 billion charge to address infractions of both state and federal laws while another $1.1 billion went to Fannie and Freddie themselves – $670 million to the former and $480 million to the latter. Yet another case that was based on mortgage-related securities at its core, which is something of a theme for the company.
Institutional Mortgage Securities
Quick Stats
- JP Morgan fined $4.5 billion
- Settled on 11/15/2013
- Case Details
No surprises here, yet another case where JP Morgan was accused of shelling out less-than-stable mortgages. This time, however, the focus was on 21 institutional investors as opposed to a mass of retail investors. The $4.5 billion settlement covers the losses incurred from instruments that were sold between 2005 and 2008. Shortly before this case settled, the company disclosed for the first time that it had $23 billion set aside for legal expenses and penalties.
The Big One: Misleading “Toxic Mortgages”
Quick Stats
- JP Morgan fined $13 billion
- Settled on 11/19/2013
- Case Details
In the largest fine (of any single company) in corporate history, JP Morgan settled for $13 billion in November of 2013. The charges stemmed from misleading investors on what regulators dubbed “toxic mortgages.” The settlement also dictated that the company had to admit wrongdoing in that it knowingly misled investors on the quality of these securities. This has been one of the few times in recent memory that the company has actually offered a “mea culpa.” Of the $13 billion, $9 billion will be used to settle federal and state civil claims while $4 billion will be used as relief to aid consumers harmed by the unlawful practice.
Libor Rigging Scandal
Quick Stats
- JP Morgan fined $108 million
- Settled on 12/4/2013
- Case Details
The alleged manipulation of the London Interbank Offered Rate (Libor) was one of the biggest European cases in recent memory. When the dust finally settled, it was found that a number of banks, including Citigroup (C ) and JP Morgan were involved. JP Morgan settled for $108 million as the investigation could not find any evidence that management had knowledge of the actions of the two traders who committed the act [see also The Ten Commandments of Dividend Investing].
Madoff Retribution
Quick Stats
- JP Morgan fined $1.7 billion
- Settled on 1/6/2014
- Case Details
The Bernie Madoff ponzi scheme is one of the most infamous in the history of the investing world. After faking portfolio gains and eventually losing billions for his clients, Madoff was sentenced to 150 years in prison (after pleading guilty) and had to forfeit $17.179 billion. His scheduled release from Federal prison is on 11/14/2139. The high profile case cost JP Morgan $1.7 billion along with an onslaught of negative press.
Currency Manipulation
Quick Stats
- JP Morgan fined $1.34 Billion
- Settled on 11/21/2014
- Case Details
JP Morgan joined the likes of UBS, Citigroup, and Royal Bank of Scotland in being fined for currency manipulation and collusion-like efforts on the part of the financial institutions. Investigations revealed instant messages between traders of the institutions showing plans to buy and sell currencies after market close in order to manipulate foreign exchanges in their favor. JP Morgan was fined $996 million by U.S. and U.K. regulators along with an additional $350 million dollar fine from the Office of the Comptroller of the Currency (OCC).
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