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JPMorgan to Pay $100M to CFTC for 'London Whale' Charges, Admits Reckless Behavior

Stocks in this article: JPM

The decision to defend the position by selling huge volumes of the index in a single day "constituted a manipulative device employed by the traders in reckless disregard of the possible consequences of their conduct," the order charged.

The case marks the first time the CFTC is using its enhanced powers under Dodd-Frank to charge players for reckless behavior.

According to a Wall Street Journal report, Republican Commissioner Scott O'Malia dissented from the agency's settlement, saying the commission "should have taken more time to investigate whether the company is liable for a more serious violation, namely price manipulation."

The CFTC however proceeded with the charges on the grounds that the new laws no longer require the regulator to prove that prices were distorted, only that behavior was reckless.

"As this case demonstrates, the Commission is now better armed than ever to protect the market from traders, like those here, who try to 'defend' their position by dumping a gargantuan, record-setting, volume of swaps virtually all at once, recklessly ignoring the obvious dangers to legitimate pricing forces," David Meister, the CFTC director of enforcement said in a statement.

JPMorgan is facing a mounting legal tab as it faces charges on multiple fronts. The bank set aside more than $9 billion toward legal reserves in the third quarter, causing it to post a loss for the first time since CEO Jamie Dimon took over as CEO in 2006.

In its most recent earnings report last week, the bank disclosed for the first time that it had $23 billion in reserves to deal with litigation issues.

-- Written by Shanthi Bharatwaj New York.

>Contact by Email.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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