JPMorgan Chase shareholders suffered a double whammy in the “London Whale” scandal.
Last year, they lost $6.2 billion when the bank’s traders in London placed bad bets on derivatives. Now, they’re going to lose $920 million more to settle
charges leveled against the bank this week by regulators in the United States and Britain.
“It adds not only insult to injury, but injury to injury,” said John C. Coffee Jr., a professor at Columbia Law School. “Record penalties are being born by the victims of the crime.”
The London Whale debacle serves as the latest example of a tension that has existed for decades, with some arguing that regulators should penalize the individuals responsible for misconduct instead of the corporation.
No individuals were named in the enforcement actions taken this week. While regulators faulted senior management for failing to properly supervise the traders, the penalties will not come out of any of the executives’ pockets.