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JP Morgan faces record $13bn fine

by LLB Editor
21st Oct 13 10:50 am

JP Morgan is to pay a record $13bn (£8bn) fine for mis-selling mortgage-backed securities.

The news comes after the company had to stump up £1bn to settle the “London Whale” scandal, where a former employee placed ruinous bets on the financial markets.

On top of these new fines, JP Morgan may still face criminal claims.

The bank has set aside $23bn to cover litigation costs. However, it estimates that another $5.7bn will be needed to cover the costs of criminal cases.

“We continuously evaluate our legal reserves, but in this highly charged and unpredictable environment, with escalating demands and penalties from multiple government agencies, we thought it was prudent to significantly strengthen them. While we expect our litigation costs should abate and normalise over time, they may continue to be volatile over the next several quarters,” JP Morgan CEO Jamie Dimon said.

“The board continues to seek a fair and reasonable settlement with the government on mortgage-related issues – and one that recognises the extraordinary circumstances of the Bear Stearns and Washington Mutual transactions, which were undertaken at the request or encouragement of the US government.”

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