By Brooke Masters, Chief Regulation Correspondent
(FT) -- JPMorgan's securities arm has been fined £33.32 million ($48.9 million), the largest penalty ever levied by the City regulator, for failing to protect billions of dollars of client money by keeping it in segregated accounts.
At the height of the financial crisis, JPMorgan's futures and options business was keeping up to $23 billion in institutional client money mixed up with its own funds in an unsegregated account at the larger bank.
The problem dates back to the merger of JPMorgan and Chase and lasted for seven years ending last July. Had the bank run into financial difficulties, clients such as pension funds and hedge funds would have been at risk of losing their money.
The administrators of Lehman Brothers, the failed investment bank, are still trying to disentangle its books due to similar problems, and the judges handling Lehman-related lawsuits have harshly criticized the UK Financial Services Authority's supervision of client money handling.
