JPM JP Morgan Chase and Co

By Jenny Strasburg 

LONDON--A U.K. financial regulator on Tuesday fined a former J.P. Morgan Chase & Co. executive more than $1 million for his role in the so-called London whale trading debacle of 2012 and his behavior during the subsequent investigation.

The Financial Conduct Authority said it imposed a GBP792,900 penalty ($1.1 million) against Achilles Macris, who oversaw the unit responsible for trading that cost J.P. Morgan more than $6 billion. The regulator in a formal notice accused Mr. Macris of "failure to be open" with authorities and "to disclose properly" financial risks and other details of the trades.

In response, Mr. Macris said in a statement that he agreed to the FCA settlement on the grounds that it didn't accuse him of deliberately misleading authorities. He also said the settlement didn't prohibit him from working in the "regulated sector," or the financial industry, and added that he is still working to clear his name.

"I have decided not to prolong what has been a drawn out and burdensome process and have settled with the FCA," he said in the statement.

Mr. Macris previously challenged FCA allegations that he deliberately misled authorities or deliberately withheld information he was obliged to provide based on his senior role at J.P. Morgan. He has said that the FCA, in its quest to penalize J.P. Morgan for the London whale episode, in 2013 effectively accused him of wrongdoing without naming him or giving him a chance to respond.

J.P. Morgan declined to comment on the FCA fine against Mr. Macris. The bank previously paid $1 billion in fines for securities-law violations tied to the losses on bad trades in its London-based Chief Investment Office. Of that, the bank agreed in 2013 to pay GBP138 million to the FCA. J.P. Morgan acknowledged wrongdoing as part of the settlements.

The size and risks of the positions earned the trader at the heart of them the nickname "London whale."

Legal wrangling over the London whale debacle continues in the U.K. The Supreme Court is expected later this year to hear arguments over how the FCA characterized the role played by Mr. Macris and other details in its final notice against J.P. Morgan. Mr. Macris is seeking to have certain references to his actions removed from the FCA settlement notice.

Tuesday's fine comes almost four years after details emerged publicly about outsized positions inside J.P. Morgan. The FCA notice Tuesday cited the April 6, 2012, Wall Street Journal article titled "' London Whale' Rattles Debt Markets," which the FCA said "drew attention to the size of those positions," which caused mark-to-market losses of $412 million in a single day.

The FCA said the article highlighted for its investigators that risks had worsened related to the positions by a London trader at J.P. Morgan. The FCA said Mr. Macris at a meeting with the FCA the previous week hadn't adequately provided "an update covering the full extent of the difficulties" tied to the derivative positions in question.

The FCA said in its notice against Mr. Macris that he failed to provide adequate information about J.P. Morgan's losses and its breaching of risk limits.

As a result of Mr. Macris's ongoing failures to communicate, the FCA said, "the message delivered to the Authority was not an accurate reflection" or the trades and risks involved. "Consequently, Mr. Macris failed to deal with the Authority in an open and cooperative manner," the FCA said in its notice.

The FCA said that the financial penalty against Mr. Macris was discounted 30%, based on mitigating factors including J.P. Morgan's clawback of Mr. Macris's benefits when he was terminated from the bank, and the timing of the settlement agreement itself.

Write to Jenny Strasburg at jenny.strasburg@wsj.com

(END) Dow Jones Newswires

February 09, 2016 09:02 ET (14:02 GMT)

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