JPMorgan Chase & Co has recently been fined $348.2 million by the Federal Reserve and the Office of the Comptroller of the Currency (OCC) for insufficient monitoring of its trading operations, Reuters reports.
This development underscores the bank’s challenges in regulating its extensive trading activities, marking a significant regulatory action against one of the largest financial institutions.
The fine stems from JPMorgan’s inadequate surveillance of billions of transactions across approximately 30 international trading platforms, spanning nearly a decade from 2014 to 2023.
These deficiencies were identified by both the Federal Reserve and the OCC, emphasizing the potential market risks due to these surveillance shortcomings.
Despite the hefty fine, a JPMorgan spokesperson has stated, “the bank has proactively identified the issue and is diligently working to address it,” adding reassurance by noting, “there is no evidence of employee misconduct or any harm inflicted upon clients or the broader market.”
The Federal Reserve has imposed additional restrictions on JPMorgan, stating: “The firm may not onboard new trading venues without receiving prior written non-objection from the Reserve Bank.
All requests for prior non-objection from the Reserve Bank shall be submitted at least thirty (30) days prior to the proposed onboarding of a new trading venue.”
This incident is not the first instance of JPMorgan facing regulatory issues over its operational oversight.
A notable precedent occurred in 2021 when the bank was fined $200 million to settle civil charges concerning record-keeping failures, highlighting ongoing compliance challenges.
In response to the latest fines, the OCC has ordered JPMorgan to significantly revamp its trade surveillance mechanism and undergo an external review of its surveillance policies.
The bank is also required to obtain regulatory approval before adding new trading platforms, emphasizing a commitment to bolstering its monitoring and compliance protocols.
This penalty serves as a potent reminder of the importance of stringent regulatory compliance and oversight in the financial sector.