J.P. Morgan Chase was last night ordered to improve its risk management following a $6.2bn (£3.8bn) derivatives trading loss highlighted by a London-based employee dubbed the "Whale".
The US Federal Reserve and the Office of the Comptroller of the Currency ordered the bank to tighten controls and improve compliance following the failings.
In April, it emerged J.P.Morgan employed a London-based trader called Bruno Iksil, who was called the London Whale because of the large positions he took.
The move by US regulators represents the first taken against the bank since it revealed the losses via those derivatives trades.
In a statement issued last night, the Financial Services Authority said it was "continuing to conduct a formal enforcement investigation into the trading losses".
According to US regulators, J.P.Morgan's compliance had "critical deficiencies with respect to suspicious activity reporting, monitoring transactions, conducting customer due diligence and risk assessment, and implementing adequate systems of internal controls".
J.P. Morgan has agreed to submit an improvement plan to the Fed within 60 days, including taking risk outcomes into account when considering compensation for senior management, reports the Times.
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