JPMorgan to reach settlement with US authorities over forex investigation

<p>The bank said it is in “advanced stages” of settlement talks.</p>

JPMorgan Chase & Co said yesterday (May 5th) it is in "advanced stages" of settlement talks with the US Department of Justice and the Federal Reserve over an investigation into the bank’s foreign-exchange sales and trading activities. The bank detailed new investigations in its latest quarterly filing with the US Securities and Exchange Commission. 

Several US and European banks including JPMorgan are involved in a criminal investigation over foreign exchange trading. In addition, the Financial Conduct Authority is investigating the compliance of the bank's London branch and European unit regarding custody services related to client assets. 

In its filing, the bank also said that French authorities are investigating its role in a series of transactions involving senior managers of investment firm Wendel Investissement to restructure its holdings in the French investment firm, the Wall Street Journal reports.

Legal expenses reach $5.5 billion

The group revealed in its filing that its "reasonably possible" legal expenses, in excess of legal reserves, could be as much as $5.5 billion (£3.6 billion) as of March 31, down from $5.8 billion three months earlier.

This filing comes as the bank paid almost $1 billion in recent years due to a range of investigations into alleged wrongdoing. The bank also settled a related lawsuit in January agreeing to pay institutional investors about $100 million.

In 2013, JPMorgan Chase agreed to a record $13 billion settlement with US authorities for misleading investors during the US housing crisis and collapse in prices.

It has seen its profit drop 6.6 per cent in the fourth quarter of 2014, dragged by legal costs. It said fixed-income trading revenue was down 23 per cent and legal costs were about twice as high as initially forecast. Net income declined to $4.93 billion, from $5.28 billion a year earlier.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.