The Achilles Macris, a former JP Morgan Chase executive and boss of the legendary London Whale, was hit with a £729,900 fine for “failing to be open and cooperative. The penalty was assessed by the Financial Conduct Authority (FCA). Mark Steward, Director of Enforcement and Market Oversight, commented on the punishment;
“A failure to communicate openly with us can affect the well-running of markets and cause unnecessary harm to investors, especially in times of financial stress or crisis. Regulators need open communication with firms so that better decisions can be made sooner. Mr Macris should have explained the position more squarely especially when he knew the Synthetic Credit Portfolio’s losses had worsened.”
The FCA stated that between 28 March 2012 and 29 April 2012 Macris did not inform the then regulator Financial Services Authority (FSA) about large issues with a Synthetic Credit Portfolio and as a result, “he failed to meet the standards expected of an approved person under Statement of Principle 4”.
Bruno Iskil became infamous in the City for his outsized trading and risky positions. In 2012, transactions involving credit default swaps went the wrong way. At the time, JPM posted an estimated $2 billion trading loss. The entire debacle came crashing down at the feet of JPM CEO Jamie Dimon as it became clear that lack of transparency and existing risk controls had utterly failed. As the damage was being assessed, Dimon called the strategy, “flawed, complex, poorly reviewed, poorly executed, and poorly monitored.”
The FCA outlined the errors on Macris’ part explaining h did not provide the Authority information about the full extent of the difficulties that the Synthetic Credit Portfolio was then facing or take steps to ensure that the Authority understood there were causes for concern with the portfolio. Macris was described as allowing an inaccurate impression of the situation.
The FCA actually applied a discount to the fine. Without the discount the fine would have been over £1.1 million.