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JPMorgan (JPM) Fined for Failing to Report Swap Transactions

·3 min read

JPMorgan JPM has been fined $850,000 by the U.S. Commodity Futures Trading Commission (“CFTC”) for not reporting certain foreign currency swaps. The CFTC said that JPM failed to report 2.1 million short-dated foreign exchange swap transactions from September 2015 to February 2020. The news was reported by Reuters.

However, per the CFTC, the Wall Street giant disclosed all the previously unreported swap transactions that it was obligated to.

JPMorgan has not made any comment on the matter yet.

The charge by the CFTC has not come as a surprise for investors. Earlier, JPMorgan has had to settle various lawsuits with the CFTC. In December 2021, the Securities and Exchange Commission (“SEC”) and the CFTC fined JPM $200 million for “widespread and longstanding failures” to preserve employee communications on personal mobile devices, messaging apps and e-mails.

Of the total amount, JPMorgan agreed to pay $125 million to the SEC and the remaining to the CFTC. The company admitted to the lapses. Per the regulators, JPMorgan allowed its staff to use WhatsApp and other communication platforms on their personal devices, and failed to preserve the offline communications in a violation of the federal securities law.

This February, it came to light that Nigeria launched a lawsuit against JPMorgan, claiming more than $1.7 billion for the bank’s role in a disputed 2011 oilfield deal.

The suit related to the purchase by energy majors Shell and Eni of the offshore OPL 245 oilfield in Nigeria. Nigeria alleged that JPM was “grossly negligent” in its decision to transfer funds paid by the energy majors into an escrow account to a company controlled by the country’s former oil minister instead of into government coffers.

While JPMorgan’s business diversification efforts, strategic add-on acquisitions, strong liquidity position and initiatives to expand branch network in new markets are expected to continue aiding profitability, the above-mentioned charges, along with several other fines, might result in an increase in overall expenses, thus hurting the company’s bottom line to an extent.

So far this year, shares of JPM have lost 28.9% compared with the decline of 23.5% recorded by the industry.


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Currently, JPMorgan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Business Malpractices by Other Major Banks

Several other banks continue to encounter legal hassles and are charged with huge sums of money for business malpractices.

A unit of The Bank of New York Mellon Corporation BK was charged with a record fine and handed a reprimand by the Central Bank of Ireland. The company broke the rules on outsourcing fund administration services and provided “inaccurate and incomplete information” to the regulators.

BNY Mellon Fund Services DAC admitted to the breaches, which took place between July 2013 and December 2019. The company was fined €10.78 million ($11.8 million) for 16 regulatory breaches. The penalty was reduced from €15.4 million as the company decided to settle.

The Central Bank of Ireland’s director of enforcement, Seana Cunningham, said that BNY Mellon “failed to act with expediency, transparency and openness even once it was aware that there were further issues with its outsourcing arrangements.”

This April, Wells Fargo & Company WFC agreed to pay $32.5 million to resolve allegations made in March 2020 of self-dealing with the company’s 401(k) plan. The settlement represents approximately 40% of the plan participants’ estimated damages.

According to papers filed in the Minnesota federal court, Wells Fargo breached its fiduciary duties by favoring its own funds in its retirement plans for employees above other similar investments that offered better results at lower fees.

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