The trades, which took place in 2012, resulted in $6.2bn in trading losses at JP Morgan and $920m in fines the following year.
Communication breakdown
According to a statement from the FCA, the former head of JP Morgan’s chief investment office (CIO) international, had failed to be open and co-operative with the Authority in 2012, when he was responsible for a number of portfolios including the Synthetic Credit Portfolio, that was responsible for the trades in question.
“Between 28 March 2012 and 29 April 2012 Mr Macris did not inform the Authority about concerns with the Synthetic Credit Portfolio and as a result he failed to meet the standards expected of an approved person under Statement of Principle 4,” the FCA said.
This lack of communication included telling the FCA’s predecessor, the FSA on 28 March 2012, that while the Synthetic Credit Portfolio had made a loss of $200m (£138m, €179m), and that it had “experienced rebalancing problems” it was “now balanced and didn’t require additional trading”.
No secrets
Secondly, the FCA said, on 10 April 2012, Macris participated in a telephone call following press reports about the ‘London Whale’ where he once again failed to provide information about concerns with the portfolio and the heightened response being adopted to addess them, despite being aware that the position of the portfolio had worsened.
“Mr Macris allowed an inaccurate impression to be given that there had been no material changes since the supervision meeting and that there were not wider causes for concern with the Synthetic Credit Portfolio,” the FCA said.
Adding: “Mr Macris should have appreciated that, by failing to inform the Authority during the meeting and the call of the causes for concern and by allowing the Authority to be reassured concerning the position of the Synthetic Credit Portfolio, the message delivered was not an accurate reflection of the state of the Synthetic Credit Portfolio.”
The fine was issued during stage two of the FCA’s investigation, which would usually allow for a 20% discount, but under the rules the FCA is allowed to agree a further discount if it believes there “has been a substantial change in the nature or seriousness of the action being taken and that an agreement would have been possible at an earlier stage if the action had commenced on a different footing”.
As a result of this, it has agreed to a further 10% discount, which lowered the fine from its initial level of £1,132,747, the FCA said.
