Oops, sorry about that. Won't happen again. Yes, it occurred on and off for 7 years. But we're on top of it now. Move along.
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The Financial Service Authority on Thursday sent out a major warning to City investment banks to tighten up the way they look after their clients' money as JP Morgan received the largest fine the regulator has ever handed down, for putting as much as $23bn of customers' funds in to the wrong bank account.
JP Morgan was fined £33.3m by the FSA for what it described as "serious breach" of rules governing the segregation of the bank's money and that of its clients.
Though no money was lost, the misallocation of the funds would have meant JP Morgan's clients would have lost their money if the bank had collapsed.
Margaret Cole, director of enforcement and financial crime at the FSA, warned that the fine would not be last for the offence and said firms needed to "sit up and take notice of this action", warning that the regulator had "several more cases in the pipeline".
The amount of client money at risk varied between £1.3bn and £15.7bn and consisted of funds held with JP Morgan's futures and option business by large institutional investment management companies and hedge funds. These clients did not know that there money was potentially at risk until yesterday's announcement.
Ironically, some of the fund managers are likely to have transferred their money to JP Morgan in the wake of Lehman Brothers collapse, as investment managers looked to put their cash into banks regarded as being safe.
The failings at JP Morgan took place over a seven year period between 2002 and 2009 and were only discovered last July. No further action is expected against the bank or any of its employees.
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