JP Morgan Likes Playing with Client Money... Illegally
I swear I tried to come up with a better title for this post but really, what else can be said?
Oooooh JP Morgan! We saw what you did there and it wasn't pretty! Taking a page from the LandAmerica playbook are we? That's absolutely adorable!
Sorry, Jamie Dimon, but I'm going to have to pull your Jr Deputy Accountant stamp of approval for this boneheaded snafu. What bitchassness have ye wrought?
UK's Daily Mail:
The bank where Tony Blair is an adviser is the target of an unprecedented probe involving billions of pounds of customers' funds, the Daily Mail can disclose.
JP Morgan Chase, whose chief executive Jamie Dimon last year recruited the former prime minister as an adviser, is being investigated by the City's watchdog, the Financial Services Authority for allegedly failing to keep track of £8.5billion of clients' money.
The FSA has called in a top firm of accountants to examine the bank's London activities after evidence emerged that JP Morgan had mixed customers' funds with its own.
Banks are meant to maintain a strict segregation of their own money from that which is held on behalf of clients.
But JP Morgan managers in London discovered last month that client and bank money used for trading futures and options - a way of speculating on movements in currencies, share prices and commodities - had apparently been put into a single pool.
Oooooh, JPM is going to have some serious 'splainin to do!
An unlimited fine? Ouch.
They raised the alarm and notified the FSA. The scale of case is unprecedented, say City insiders. The FSA has penalised small firms in the past for mixing funds owned by clients and the banks themselves.
But this is thought to be the first case involving such a large household name.
JP Morgan Chase faces the threat of an unlimited fine if the watchdog decides enforcement action is necessary.
News of the FSA investigation will come as a huge embarrassment for the bank, which is valued on Wall Street at £100billion.
It is thought that the JP Morgan Chase problem dates back to late 2002. This followed the takeover of JP Morgan by Chase Manhattan two years earlier.
Assets were not segregated to protect clients as FSA rules demand, insiders believe.
JP Morgan could not be reached for comment but we really, really wanted to ask them if they are going to start charging 59% APY on Chase credit cards to cover this inconvenient little problem.