J.P. Morgan Entering Phase Two of its Regulatory Nightmare

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J.P. Morgan Chief Executive Jamie Dimon issued a stark warning to investors back in May: while the congressional hearings are over, the regulatory fallout from the $6.2 billion “London Whale” trading fiasco was nowhere near complete. Indeed, it looks like it’s just getting started.

The Securities and Exchange Commission is planning to file civil charges against the J.P. Morgan and, in breaking an industry precedent, will reportedly look to force the bank to publicly admit to wrongdoing for its lack of risk control. Historically, banks facing civil charges have been able to pay fines while neither accepting nor denying culpability. SEC Chairwoman Mary Jo White signaled earlier this year that that tradition would no longer be recognized, although the regulator has yet to use its newfound power.

Being required to admit to wrongdoing may sound harmless, but the act has more effect than you may think. First off, it’s a black eye for management, which is still recovering from the public beating it took in Washington throughout the last year. But more importantly, it could open the bank up to potential lawsuits from investors.

One person who appears to be in the clear, rather ironically, is the very man who was largely responsible for the damage. Bruno Iksil, the former J.P. Morgan trader whose fingerprints were on the outrageously-sized derivatives bets, likely won’t face charges for his role, according to the Wall Street Journal.

In addition to the “London Whale” fallout, J.P. Morgan is now being investigated for selling shoddy mortgage securities, among other legal woes.

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List of the Day: Difficult Questions

In interviews, the hardest questions are often those without “correct” answers. Here are three of the toughest. Practice answering them before your next interview.

  1. What is your biggest weakness?
  2. What didn’t work in your last position?
  3. Why is there a gap in your employment record?

(Source: eFinancialCareers)

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