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JPMorgan Chase & Co. expects to be fined by authorities in the U.S. and U.K. over last year’s $6.2 billion trading loss, which led to criminal charges against two former employees, Bloomberg News reported yesterday. The Securities and Exchange Commission signaled in a complaint filed yesterday against Javier Martin-Artajo and Julien Grout that the New York-based bank will be held accountable for providing inaccurate information to investors after the two men “fraudulently” mismarked their trades to conceal losses. The bank also expects to be fined by the Department of Justice, the Commodity Futures Trading Commission and the U.K.’s Financial Conduct Authority.

The U.S. Federal Reserve was given a week to tell a federal judge its position on immediately rewriting regulations setting debit card swipe fees in the wake of a court found the current rule unlawful, Bloomberg News reported yesterday. U.S. District Judge Richard Leon yesterday ordered Fed General Counsel Scott Alvarez to appear in his courtroom on Aug. 21 after a lawyer for the Fed said it hadn’t made any decisions on how to replace the current rule, or whether to appeal the judge’s ruling. Earlier in the hearing, Judge Leon laid out a timeline that would put a final interim rule in place by the end of the month. An interim final rule takes effect immediately before any public comments are accepted. Yesterday's hearing comes two weeks after retailers battling banks over debit card transaction costs were handed a victory by Judge Leon, who said that merchants were overcharged billions of dollars under an unlawful swipe fee set by the Fed.

The JPMorgan Chase & Co. trader known as the "London Whale" has reached an agreement with federal authorities to avoid criminal prosecution over a $6 billion trading loss, but two former colleagues are expected to be charged as soon as today, the Wall Street Journal reported today. Prosecutors are expected to charge Javier Martin-Artajo, a Spaniard who led the team that made the disastrous trades, and Julien Grout, a Frenchman responsible for recording and distributing daily values on the group's positions. They don't, however, plan to bring charges against Bruno Iksil, who made the wagers that earned him the nickname of the "London Whale." The developments mark the first move by prosecutors trying to uncover who was responsible for the trading fiasco in a London outpost of the bank's chief investment office, and whether any wrongdoing was involved. J.P. Morgan has been arguing that a small group of traders was largely responsible for the mess, which generated big trading losses early in 2012. It isn't clear whether prosecutors expect to bring charges against others, or have concluded that more-senior executives did nothing wrong.

The top U.S. derivatives regulator subpoenaed Goldman Sachs Group Inc. and JPMorgan Chase & Co. for documents relating to their warehouses for aluminum and other metals, Bloomberg News reported yesterday. The Commodity Futures Trading Commission has requested documents dating to the start of 2010 about the banks’ commodity warehouses. Glencore Xstrata Plc, which owns warehousing business Pacorini, also received a subpoena. MillerCoors LLC, Encore Wire Corp. and other metal users have complained about long queues and artificially high prices at the warehouses, particularly for copper and aluminum.

The federal regulator that polices accounting firms is proposing a major overhaul of how company audits are reported to the public, a move that could provide investors with deeper insight into the health of corporations, the New York Times DealBook blog reported yesterday. The Public Company Accounting Oversight Board wants accounting firms to include a potentially large amount of new information in the audit report that is attached to a company’s annual report. For instance, an auditor would have to explain where it found it difficult to form judgments about a company’s books. That difficulty might stem from the complexity of the company’s financial statements, or from a lack of evidence to support management’s estimates of an accounting item. The proposal is one of the most ambitious initiatives to come from the oversight board, which was set up 10 years ago after devastating accounting scandals at large companies revealed serious shortcomings at auditing firms.

Federal agents arrested seven people accused of taking part in a $140 million international penny stock fraud that U.S. prosecutors say is one of the largest in history, Bloomberg News reported yesterday. Six individuals in the U.S. are accused of participating in a scheme to inflate the values of at least a dozen worthless stocks and market them to investors, U.S. Attorney Loretta E. Lynch said yesterday, and a seventh defendant was arrested in Canada. The stocks were sold to victims in as many as 35 countries, prosecutors said. Some victims were swindled a second time through a separate scheme in which investors were told they would pay an “advance fee” to recoup their losses, according to prosecutors. “The defendants used our securities markets as a platform from which to run elaborate fraudulent schemes to victimize unsuspecting investors across the globe,” Lynch said. “Where others saw citizens of the world, the defendants saw a pool of potential marks.” The government said the scheme took place from 2008 to July 2013.

U.S. District Judge Denise Cote said that the Federal Housing Finance Agency (FHFA) may pursue a fraud lawsuit against Ally Financial Inc even though Ally's Residential Capital LLC mortgage unit is in bankruptcy, Reuters reported yesterday. Judge Cote said that the lawsuit is unlikely to have an "immediate adverse economic consequence" for ResCap's estate, such that it would be subject to an automatic stay under the U.S. Bankruptcy Code. Ally is among 18 defendants that the FHFA sued in 2011 for allegedly making false or misleading statements in documents relating to residential mortgage-backed securities bought by Fannie Mae, Freddie Mac or both. FHFA, the conservator for both Fannie and Freddie, sued Ally to recoup losses on the sale of more than $6 billion of securities to Freddie Mac between September 2005 and May 2007. Fourteen of the 15 pending FHFA lawsuits are before Cote. Three others ended in settlements, including a $885 million accord last month with Swiss bank UBS AG.

IndyMac Bancorp's former chief executive says a federal judge erred when he ruled the failed bank's insurers didn't have to pay for his defense costs in a legal fight with government regulators over allegations of fraud and securities violations, Dow Jones Daily Bankruptcy Review reported today. Lawyers for Michael W. Perry told a federal appellate court in California on Thursday that an interrelated wrongful acts exclusion provision in IndyMac's $80 million directors' and officers' insurance policy shouldn't let insurers off the hook for his defense costs in his legal fight with the Securities and Exchange Commission. The SEC sued Perry along with IndyMac's former finance chief, alleging that the failed thrift didn't properly disclose the risks of its subprime-mortgage holdings to investors.

New York Attorney General Eric Schneiderman sued an online lender with ties to an American Indian tribe and its affiliates Monday, alleging that they charged interest rates to low-income New Yorkers that were more than 10 times higher than state law allows, the Wall Street Journal reported today. Schneiderman accused Western Sky Financial LLC and its affiliates, WS Funding LLC and CashCall Inc., of acting "in concert" in an alleged scheme to make loans at more than 355 percent annual interest. The lawsuit poses a key test for regulators who have begun cracking down on online lenders, including those affiliated with Indian tribes. Government officials say the lenders are violating state interest-rate caps and consumer-protection laws, but tribes say they are immune because they operate as sovereign governments.

The U.S. may announce charges as early as this week against former London-based JPMorgan Chase & Co. employees related to allegations they tried to conceal losses last year, Bloomberg News reported yesterday. The investigation has centered on whether employees attempted to inflate the value of trades on the bank’s books by mismarking them. Federal officials are considering charges related to mismarking books and falsifying documents. JPMorgan first disclosed losses in its Chief Investment Office’s London unit in May 2012 after what Chief Executive Officer Jamie Dimon called “egregious mistakes” in managing credit-derivative positions. The trades by Bruno Iksil, nicknamed the London Whale because of the size of his holdings, eventually lost more than $6.2 billion for the bank.