Source; WallStreetOnParade.com
Last Wednesday, JPMorgan Chase, the publicly-traded parent of the largest federally-insured bank in the United States as well as a five-count felon, revealed in a filing with the Securities and Exchange Commission that on top of the $348 million it paid out in March to two of its banking regulators for sketchy trading violations involving “billions” of trades on 30 global trading venues, it “expects to enter into a resolution with a third U.S. regulator that will require the Firm to, among other things, pay a civil penalty of $100 million….” (See “Trading Venues Investigations” on page 168 of the SEC filing at this link.) JPMorgan Chase did not name this third regulator but Bloomberg News reported that it is the Commodity Futures Trading Commission.
The two federal banking regulators that imposed the trading fines in March are the Office of the Comptroller of the Currency (OCC), which fined JPMorgan Chase Bank $250 million, while the Federal Reserve fined the bank holding company $98.2 million. The OCC said the misconduct occurred since at least 2019. The Fed said the bank had engaged in the misconduct over the span of nine years, from 2014 to 2023.
Now here is where you need to pay very close attention. The OCC is the regulator of national, federally-insured banks – those allowed to operate across state lines. The Federal Reserve is the regulator of bank holding companies. Neither of these “bank” regulators are empowered to investigate securities trading. That’s because licensed traders are not allowed to be employed as such by federally-insured banks. Licensed traders can only be employed as such by broker-dealers, which are regulated and supervised at the federal level by the Securities and Exchange Commission.
The OCC’s March order specifically names the federally-insured bank (JPMorgan Chase Bank, N.A.) as the target of its trading fine. The Federal Reserve names the bank holding company (JPMorgan Chase) as the target of the fine but it references the Federal Deposit Insurance Act (which pertains to federally-insured banks) as well as “unsafe and unsound banking practices” which refer to federally-insured banks, not broker-dealers.
It’s the job of the Securities and Exchange Commission to investigate misconduct involving “billions” of trades on 30 global trading venues. We reached out yesterday to the SEC’s press office to learn why it was missing in action from this investigation involving serious trading misconduct over a nine-year span. We received no response….