The 2nd U.S. Court of Appeals recently ruled in favor of JPMorgan Chase & Chief Executive Officer, Jamie Dimon, clearing him and other bank officials of conducting a poorly run investigation into the 2012 trading scandal known as “London Whale.” The court said that the plaintiff, Ernesto Espinoza, did not show sufficient evidence to prove that JPMorgan acted negligently, or that bank officials publicly downplayed the company’s losses of $6.2 billion.
Bruno Iksil, the man responsible for JPMorgan’s losses in its chief investment office, made such enormous bets that he became known as the “London Whale” in financial circles.
According to Chief Judge Robert Katzman, JPMorgan conducted an extensive investigation into Iksil’s questionable wagers and took steps to make some of the changes requested by Espinoza, including pay cuts and improved controls. Katzman also said that it is not the court’s place to question board decisions, nor is JPMorgan under any obligation to provide Espinoza with any further details about their decisions surrounding the “London Whale” investigation.
The appeals court revisited the case after consulting the Delaware Supreme Court on how to evaluate cases like this in the future.
In an effort to settle U.S. and British probes into Iksil’s misconduct, JPMorgan admitted wrongdoing and has paid over one billion dollars. Two former traders from the company have been charged with covering up losses that were linked to Iksil. Iksil, a French national, is cooperating with officials.
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