JPMorgan Chase has agreed to pay about $800 million to a host of government agencies in Washington, D.C., and London — and make a groundbreaking admission of wrongdoing — to settle allegations stemming from a multibillion-dollar trading loss, the New York Times Dealbook blog reported yesterday. The settlements, expected this week, will help the nation’s biggest bank move beyond last year’s $6 billion blunder and mend frayed relationships with regulators. Senior JPMorgan executives also avoided charges in the case, another victory for the bank, despite initial questions about whether they misled investors about the risk of the trades. An admission of wrongdoing with the Securities and Exchange Commission and other regulators — a reversal of a longtime policy that has allowed banks to “neither admit nor deny” misconduct — will be a rare stain on the reputation of a bank that prides itself on managing risk. It may also expose JPMorgan to private litigation. JPMorgan will acknowledge that it should have caught the problem faster. The settlement, which reflects a somewhat tougher line now being taken by the SEC in seeking admissions from defendants, also will require the bank to admit that its lax controls allowed traders in a unit in London to build the risky position and cover up their losses.
