SEASONALLY ADJUSTED DATA
In the week ending September 14, the advance figure for seasonally adjusted initial claims was 309,000, an increase of 15,000 from the previous week's revised figure of 294,000. The 4-week moving average was 314,750, a decrease of 7,000 from the previous week's revised average of 321,750.
The advance seasonally adjusted insured unemployment rate was 2.1 percent for the week ending September 7, a decrease of 0.1 percentage point from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 7 was 2,787,000, a decrease of 28,000 from the preceding week's revised level of 2,815,000. The 4-week moving average was 2,885,000, a decrease of 54,000 from the preceding week's revised average of 2,939,000.
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 271,747 in the week ending September 14, an increase of 42,262 from the previous week. There were 330,454 initial claims in the comparable week in 2012.
The advance unadjusted insured unemployment rate was 1.9 percent during the week ending September 7, unchanged from the prior week's revised rate. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,505,514, a decrease of 13,496 from the preceding week's revised level of 2,519,010. A year earlier, the rate was 2.3 percent and the volume was 2,927,923.
The total number of people claiming benefits in all programs for the week ending August 31 was 4,037,491, a decrease of 235,250 from the previous week. There were 5,173,597 persons claiming benefits in all programs in the comparable week in 2012.
No state was triggered "on" the Extended Benefits program during the week ending August 31.
Initial claims for UI benefits filed by former Federal civilian employees totaled 927 in the week ending September 7, a decrease of 519 from the prior week. There were 2,073 initial claims filed by newly discharged veterans, a decrease of 124 from the preceding week.
There were 18,651 former Federal civilian employees claiming UI benefits for the week ending August 31, a decrease of 1,301 from the previous week. Newly discharged veterans claiming benefits totaled 31,296, a decrease of 1,989 from the prior week.
States reported 1,454,824 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending August 31, unchanged from the prior week. There were 2,162,532 persons claiming EUC in the comparable week in 2012. EUC weekly claims include first, second, third, and fourth tier activity.
The highest insured unemployment rates in the week ending September 7 were in Puerto Rico (4.0), New Jersey (3.5), Alaska (3.1), Connecticut (3.0), Pennsylvania (3.0), New Mexico (2.9), New York (2.7), Virgin Islands (2.7), Illinois (2.5), Oregon (2.4), and Rhode Island (2.4).
The largest increases in initial claims for the week ending September 7 were in Tennessee (+681), Oklahoma (+601), Mississippi (+298), Maine (+219), and South Carolina (+192), while the largest decreases were in California (-25,412), New York (-2,260), Florida (-1,808), Oregon (-1,738), and Pennsylvania (-1,295).
Friday, September 20, 2013
$90 MILLION AWARDED TO SUPPORT TRIBAL JUSTICE AND SAFETY
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, September 18, 2013
Justice Department Awards $90 Million to Enhance, Support Tribal Justice and Safety
Streamlined Grant Program Offers Financial Assistance with Indian Tribes’ Prevention and Law Enforcement Efforts, Victim Services and Youth Programs
The Department of Justice today announced the awarding of 192 grants to 110 American Indian tribes, Alaska Native villages, tribal consortia and tribal designated non-profits. The grants will provide more than $90 million to enhance law enforcement practices and sustain crime prevention and intervention efforts in nine purpose areas including public safety and community policing; justice systems planning; alcohol and substance abuse; corrections and correctional alternatives; violence against women; juvenile justice; and tribal youth programs. The awards are made through the department’s Coordinated Tribal Assistance Solicitation (CTAS), a single application for tribal-specific grant programs.
Associate Attorney General Tony West and Office of Justice Programs Assistant Attorney General Karol V. Mason made the announcement during a meeting of northwest tribal leaders with the Attorney General’s Advisory Committee’s Native American Issues Subcommittee (NAIS) in Celilo Village, Ore.
“These programs take a community-based and comprehensive approach to the root causes and consequences of crime, as well as target areas of possible intervention and treatment,” said Associate Attorney General West. “The CTAS programs are critical tools to help reverse unacceptably high rates of crime in Indian country, and they are a product of the shared commitment by the Department of Justice and tribal nations to strengthen and sustain healthy communities today and for future generations.”
“The Department of Justice has a responsibility to make sure its resources are not only available but accessible to tribes in a manner that they have defined and envisioned to meet the needs of their communities,” said Assistant Attorney General Mason. “As we have shown over the last four years, the Department of Justice takes this responsibility very seriously.”
The department developed CTAS through its Office of Community Oriented Policing, Office of Justice Programs and Office on Violence against Women, and administered the first round of consolidated grants in September 2010. Over the past four years, it has awarded 989 grants totaling more than $437 million. Information about the consolidated solicitation is available at www.justice.gov/tribal/. A fact sheet on CTAS is available at www.justice.gov/tribal/ctas2013/ctas-factsheet.pdf.
Thirty U.S. Attorneys from districts that include Indian country or one or more federally recognized tribes serve on the NAIS. The NAIS focuses exclusively on Indian country issues, both criminal and civil, and is responsible for making policy recommendations to the Attorney General regarding public safety and legal issues.
Next month, the Justice Department will hold its annual consultation on violence against native women on Oct. 31st, 2013, in Bismarck, N.D. In addition, an Interdepartmental Tribal Justice, Safety and Wellness Session will be held in Bismarck on Oct. 29-30, 2013. It will include an important listening session with tribal leaders to obtain their views on the Department grants, as well as valuable training and technical assistance.
Wednesday, September 18, 2013
Justice Department Awards $90 Million to Enhance, Support Tribal Justice and Safety
Streamlined Grant Program Offers Financial Assistance with Indian Tribes’ Prevention and Law Enforcement Efforts, Victim Services and Youth Programs
The Department of Justice today announced the awarding of 192 grants to 110 American Indian tribes, Alaska Native villages, tribal consortia and tribal designated non-profits. The grants will provide more than $90 million to enhance law enforcement practices and sustain crime prevention and intervention efforts in nine purpose areas including public safety and community policing; justice systems planning; alcohol and substance abuse; corrections and correctional alternatives; violence against women; juvenile justice; and tribal youth programs. The awards are made through the department’s Coordinated Tribal Assistance Solicitation (CTAS), a single application for tribal-specific grant programs.
Associate Attorney General Tony West and Office of Justice Programs Assistant Attorney General Karol V. Mason made the announcement during a meeting of northwest tribal leaders with the Attorney General’s Advisory Committee’s Native American Issues Subcommittee (NAIS) in Celilo Village, Ore.
“These programs take a community-based and comprehensive approach to the root causes and consequences of crime, as well as target areas of possible intervention and treatment,” said Associate Attorney General West. “The CTAS programs are critical tools to help reverse unacceptably high rates of crime in Indian country, and they are a product of the shared commitment by the Department of Justice and tribal nations to strengthen and sustain healthy communities today and for future generations.”
“The Department of Justice has a responsibility to make sure its resources are not only available but accessible to tribes in a manner that they have defined and envisioned to meet the needs of their communities,” said Assistant Attorney General Mason. “As we have shown over the last four years, the Department of Justice takes this responsibility very seriously.”
The department developed CTAS through its Office of Community Oriented Policing, Office of Justice Programs and Office on Violence against Women, and administered the first round of consolidated grants in September 2010. Over the past four years, it has awarded 989 grants totaling more than $437 million. Information about the consolidated solicitation is available at www.justice.gov/tribal/. A fact sheet on CTAS is available at www.justice.gov/tribal/ctas2013/ctas-factsheet.pdf.
Thirty U.S. Attorneys from districts that include Indian country or one or more federally recognized tribes serve on the NAIS. The NAIS focuses exclusively on Indian country issues, both criminal and civil, and is responsible for making policy recommendations to the Attorney General regarding public safety and legal issues.
Next month, the Justice Department will hold its annual consultation on violence against native women on Oct. 31st, 2013, in Bismarck, N.D. In addition, an Interdepartmental Tribal Justice, Safety and Wellness Session will be held in Bismarck on Oct. 29-30, 2013. It will include an important listening session with tribal leaders to obtain their views on the Department grants, as well as valuable training and technical assistance.
INSPECTOR GENERAL'S OFFICE DETERMINES PHARMACY HOME DELIVERY TO HAVE BENEFITS
FROM: U.S. DEFENSE DEPARTMENT
IG Finds Pharmacy Home Delivery Cost-Efficient, Safe
From a TRICARE Management Activity News Release
FALLS CHURCH, Va., Sept. 16, 2013 - Following an almost year-long study of the TRICARE Pharmacy Home Delivery program requested by members of Congress, the Defense Department inspector general's office has determined it is a cost-efficient way for beneficiaries to get their prescription medications, TRICARE Management Activity officials reported.
The inspector general's study found that the Home Delivery mail-order program saved the government 16.7 percent -- nearly $67 million -- in the third quarter of fiscal year 2012, officials said.
The audit compared what the government spent on prescription drugs through Home Delivery and what the cost would have been at retail pharmacies. Additionally, the TRICARE pharmacy contractor, Express Scripts, reported to the inspector general that Home Delivery offers a 99.99 percent prescription fill accuracy rate, high beneficiary satisfaction and improved patient outcomes.
"Although not surprised, we are certainly pleased at the results of the report," said Navy Rear Adm. Thomas J. McGinnis, chief of TRICARE pharmaceutical operations. "Home Delivery saves beneficiaries and the Department of Defense millions of dollars every year, and gives beneficiaries a safe and secure way to receive their prescription medications."
In June 2013, the 1.64 million prescriptions filled through Home Delivery represented a 17 percent increase in volume compared to the previous year, while retail prescription volume fell 10 percent, officials said.
When TRICARE beneficiaries use the Home Delivery pharmacy to fill maintenance medication prescriptions, they receive a 90-day supply through the mail and have no copayment for generic formulary medications and a $13 copay for brand-name formulary medications. At retail network pharmacies, beneficiaries pay $5 for a 30-day supply of generic formulary medications and $17 for brand name formulary medications.
TRICARE beneficiaries can sign up for Home Delivery online, by mail or by phone.
IG Finds Pharmacy Home Delivery Cost-Efficient, Safe
From a TRICARE Management Activity News Release
FALLS CHURCH, Va., Sept. 16, 2013 - Following an almost year-long study of the TRICARE Pharmacy Home Delivery program requested by members of Congress, the Defense Department inspector general's office has determined it is a cost-efficient way for beneficiaries to get their prescription medications, TRICARE Management Activity officials reported.
The inspector general's study found that the Home Delivery mail-order program saved the government 16.7 percent -- nearly $67 million -- in the third quarter of fiscal year 2012, officials said.
The audit compared what the government spent on prescription drugs through Home Delivery and what the cost would have been at retail pharmacies. Additionally, the TRICARE pharmacy contractor, Express Scripts, reported to the inspector general that Home Delivery offers a 99.99 percent prescription fill accuracy rate, high beneficiary satisfaction and improved patient outcomes.
"Although not surprised, we are certainly pleased at the results of the report," said Navy Rear Adm. Thomas J. McGinnis, chief of TRICARE pharmaceutical operations. "Home Delivery saves beneficiaries and the Department of Defense millions of dollars every year, and gives beneficiaries a safe and secure way to receive their prescription medications."
In June 2013, the 1.64 million prescriptions filled through Home Delivery represented a 17 percent increase in volume compared to the previous year, while retail prescription volume fell 10 percent, officials said.
When TRICARE beneficiaries use the Home Delivery pharmacy to fill maintenance medication prescriptions, they receive a 90-day supply through the mail and have no copayment for generic formulary medications and a $13 copay for brand-name formulary medications. At retail network pharmacies, beneficiaries pay $5 for a 30-day supply of generic formulary medications and $17 for brand name formulary medications.
TRICARE beneficiaries can sign up for Home Delivery online, by mail or by phone.
DOD REPORTS AFGHAN AIR FORCE DOING WELL
FROM: U.S. DEFENSE DEPARTMENT
Afghan Air Force Flourishing, ISAF Official Says
By Karen Parrish
American Forces Press Service
NATIONAL HARBOR, Md., Sept. 19, 2013 - The mission: build an independent, self-sustaining air force from the inside out, from the ground up. The commander leading that effort calls it the most complex undertaking NATO and the U.S. Air Force have ever tackled.
Air Force Brig. Gen. John Michel leads NATO Air Training Command Afghanistan, the organization charged with training the Afghan air force. He is here this week attending an Air Force conference, and spoke to American Forces Press Service about the Afghan air capability that he maintains no longer is fledgling, but rather is flourishing.
Not only are Afghan pilots now carrying out combat, resupply and medevac missions, he said, the humanitarian capability they bring to their government is helping to legitimize their nation. In a country largely inaccessible by road, the general noted, air reach equals government reach. And Afghan aviation dates to 1919, he said.
"It's a source of national pride," Michel said. About a month ago, he said, the Afghan air force was called to respond to a flood that had left citizens stranded, "and they saved over 300 men, women and children."
The force is critical to the Afghan army as well, he said. Close air support, evacuating the wounded, and in many cases, even basic resupply are only possible in Afghanistan with aircraft, Michel noted.
The Afghan air force, he said, "is really the foundational element for legitimacy locally, nationally and internationally." For example, he said, the core of trained air traffic controllers that will grow up around the air force and ultimately transfer to the civilian world will form part of the infrastructure backbone Afghanistan will need to attract long-term foreign investment.
The air training command's staff includes some 600 people from 14 coalition nations. They work with their Afghan counterparts on Afghan bases at six locations within the country, training and advising every member of the Afghan air force, from the highest-level leaders down to the newest junior recruits.
Michel pointed out the timeline that makes 2014 the handoff year for combat operations doesn't apply to his command. The Afghan air force is on a separate timeline from the army and police forces, and is not set for full operational autonomy until 2017, he said. The NATO air training command is set to grow during that time to 1,114 military and defense contractors, plus 530 base support personnel.
Meanwhile, coalition aircrews fly alongside their Afghan counterparts during training missions, combat missions, and joint missions conducting resupply, infiltration, exfiltration, passenger movements and casualty evacuation for the Afghan army. Coalition advisors also train in all the support roles including maintenance, logistics, finance and communications. About 200 Afghan students are now in various phases of the pilot training pipeline, Michel said.
The Afghan air force is divided into three wings, located respectively in Kabul, Kandahar and Shindand, in western Afghanistan's Herat province. The command center is in Kabul, and the Shindand Air Base is the main training area. The Afghan force currently has a fleet of 92 fixed-wing and rotary aircraft, with 12 more Mi-17 transport helicopters being delivered starting this month. Ultimately, the force's fleet will include 58 Mi-17s, six Mi-35 attack helicopters, 20 C-208 turboprop airliners, four C-130 transport aircraft and 20 A-29 light attack aircraft.
Michel noted the Soviet influence in Afghanistan dating to the 1920s but dominant from the 1950s to the 1990s extended to the air force, which followed the Soviet model of essentially a client force trained to fly but reliant on its patrons for equipment, maintenance, support and administration.
Command and control will be the essence of the "small, but mighty" air capability Afghanistan plans to grow to a force of 8,000, Michel said. "That was not present in the dependency model," he added. And while the model encouraged brilliant flying, it omitted "disciplined execution," the general said, "which is what makes [the U.S.] Air Force the best in the history of mankind."
Disciplined execution includes doctrine and an emphasis on safety, Michel said, which his command is training or developing in the growing Afghan force, along with English, military science and a host of other subjects and resources.
"Among those 8,000 people, there are seven specific capabilities and 60 [military occupational specialties]," he noted. The mission set for the Afghan air force rests on core capabilities of air movement, aerial fires, aerial reconnaissance, force protection, sustainment and intelligence, Michel said. That integration of capabilities is crucial to the self-sustaining force that Afghanistan needs, he said.
"The maintainer number that we're going to is sub-1,400," he said. "And then we'll have some number less than that for pilots." The A-29 "Super Takano" program aims at 30 pilots for 20 aircraft, he said, but those 30 will over time "grow out of the cockpit."
"We're growing a profession," he said. Establishing a military education network that will produce professional officers and noncommissioned officers -- Michel called the NCO corps "the secret sauce" of the U.S. military -- recruiting and marketing are all part of the mission, he said.
"Is it hard?" the general said of his mission. "Let's see; we're building it from the inside out, the ground up. The more capability we start to garner, the more they want to employ. The more they employ, the less we can train. ... And, as of a week from today, we're adding the first two of four C-130s."
As capabilities grow, so do costs and complications, Michel acknowledged. The Afghan government may choose to adjust its timeline for some capabilities as its contributors' budgets tighten, he said, and his command is prepared with a range of options to scale capability to cost as needed.
"I have 39 months from today to finish this mission," he said. "We're not building capabilities they don't need to have."
Afghan Air Force Flourishing, ISAF Official Says
By Karen Parrish
American Forces Press Service
NATIONAL HARBOR, Md., Sept. 19, 2013 - The mission: build an independent, self-sustaining air force from the inside out, from the ground up. The commander leading that effort calls it the most complex undertaking NATO and the U.S. Air Force have ever tackled.
Air Force Brig. Gen. John Michel leads NATO Air Training Command Afghanistan, the organization charged with training the Afghan air force. He is here this week attending an Air Force conference, and spoke to American Forces Press Service about the Afghan air capability that he maintains no longer is fledgling, but rather is flourishing.
Not only are Afghan pilots now carrying out combat, resupply and medevac missions, he said, the humanitarian capability they bring to their government is helping to legitimize their nation. In a country largely inaccessible by road, the general noted, air reach equals government reach. And Afghan aviation dates to 1919, he said.
"It's a source of national pride," Michel said. About a month ago, he said, the Afghan air force was called to respond to a flood that had left citizens stranded, "and they saved over 300 men, women and children."
The force is critical to the Afghan army as well, he said. Close air support, evacuating the wounded, and in many cases, even basic resupply are only possible in Afghanistan with aircraft, Michel noted.
The Afghan air force, he said, "is really the foundational element for legitimacy locally, nationally and internationally." For example, he said, the core of trained air traffic controllers that will grow up around the air force and ultimately transfer to the civilian world will form part of the infrastructure backbone Afghanistan will need to attract long-term foreign investment.
The air training command's staff includes some 600 people from 14 coalition nations. They work with their Afghan counterparts on Afghan bases at six locations within the country, training and advising every member of the Afghan air force, from the highest-level leaders down to the newest junior recruits.
Michel pointed out the timeline that makes 2014 the handoff year for combat operations doesn't apply to his command. The Afghan air force is on a separate timeline from the army and police forces, and is not set for full operational autonomy until 2017, he said. The NATO air training command is set to grow during that time to 1,114 military and defense contractors, plus 530 base support personnel.
Meanwhile, coalition aircrews fly alongside their Afghan counterparts during training missions, combat missions, and joint missions conducting resupply, infiltration, exfiltration, passenger movements and casualty evacuation for the Afghan army. Coalition advisors also train in all the support roles including maintenance, logistics, finance and communications. About 200 Afghan students are now in various phases of the pilot training pipeline, Michel said.
The Afghan air force is divided into three wings, located respectively in Kabul, Kandahar and Shindand, in western Afghanistan's Herat province. The command center is in Kabul, and the Shindand Air Base is the main training area. The Afghan force currently has a fleet of 92 fixed-wing and rotary aircraft, with 12 more Mi-17 transport helicopters being delivered starting this month. Ultimately, the force's fleet will include 58 Mi-17s, six Mi-35 attack helicopters, 20 C-208 turboprop airliners, four C-130 transport aircraft and 20 A-29 light attack aircraft.
Michel noted the Soviet influence in Afghanistan dating to the 1920s but dominant from the 1950s to the 1990s extended to the air force, which followed the Soviet model of essentially a client force trained to fly but reliant on its patrons for equipment, maintenance, support and administration.
Command and control will be the essence of the "small, but mighty" air capability Afghanistan plans to grow to a force of 8,000, Michel said. "That was not present in the dependency model," he added. And while the model encouraged brilliant flying, it omitted "disciplined execution," the general said, "which is what makes [the U.S.] Air Force the best in the history of mankind."
Disciplined execution includes doctrine and an emphasis on safety, Michel said, which his command is training or developing in the growing Afghan force, along with English, military science and a host of other subjects and resources.
"Among those 8,000 people, there are seven specific capabilities and 60 [military occupational specialties]," he noted. The mission set for the Afghan air force rests on core capabilities of air movement, aerial fires, aerial reconnaissance, force protection, sustainment and intelligence, Michel said. That integration of capabilities is crucial to the self-sustaining force that Afghanistan needs, he said.
"The maintainer number that we're going to is sub-1,400," he said. "And then we'll have some number less than that for pilots." The A-29 "Super Takano" program aims at 30 pilots for 20 aircraft, he said, but those 30 will over time "grow out of the cockpit."
"We're growing a profession," he said. Establishing a military education network that will produce professional officers and noncommissioned officers -- Michel called the NCO corps "the secret sauce" of the U.S. military -- recruiting and marketing are all part of the mission, he said.
"Is it hard?" the general said of his mission. "Let's see; we're building it from the inside out, the ground up. The more capability we start to garner, the more they want to employ. The more they employ, the less we can train. ... And, as of a week from today, we're adding the first two of four C-130s."
As capabilities grow, so do costs and complications, Michel acknowledged. The Afghan government may choose to adjust its timeline for some capabilities as its contributors' budgets tighten, he said, and his command is prepared with a range of options to scale capability to cost as needed.
"I have 39 months from today to finish this mission," he said. "We're not building capabilities they don't need to have."
JP MORGAN TO PAY $200 MILLION PENALTY TO SETTLE SEC CHARGES
FROM: US. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today charged JPMorgan Chase & Co. with misstating financial results and lacking effective internal controls to detect and prevent its traders from fraudulently overvaluing investments to conceal hundreds of millions of dollars in trading losses.
The SEC previously charged two former JPMorgan traders with committing fraud to hide the massive losses in one of the trading portfolios in the firm’s chief investment office (CIO). The SEC’s subsequent action against JPMorgan faults its internal controls for failing to ensure that the traders were properly valuing the portfolio, and its senior management for failing to inform the firm’s audit committee about the severe breakdowns in CIO’s internal controls.
JPMorgan has agreed to settle the SEC’s charges by paying a $200 million penalty, admitting the facts underlying the SEC’s charges, and publicly acknowledging that it violated the federal securities laws.
“JPMorgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses,” said George S. Canellos, Co-Director of the SEC’s Division of Enforcement. “While grappling with how to fix its internal control breakdowns, JPMorgan’s senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company’s problems and determine whether accurate and reliable information was being disclosed to investors and regulators.”
As part of a coordinated global settlement, three other agencies also announced settlements with JPMorgan today: the U.K. Financial Conduct Authority, the Federal Reserve, and the Office of the Comptroller of the Currency. JPMorgan will pay a total of approximately $920 million in penalties in these actions by the SEC and the other agencies.
According to the SEC’s order instituting a settled administrative proceeding against JPMorgan, the Sarbanes-Oxley Act of 2002 established important requirements for public companies and their management regarding corporate governance and disclosure. Public companies such as JPMorgan are required to create and maintain internal controls that provide investors with reasonable assurances that their financial statements are reliable, and ensure that senior management shares important information with key internal decision makers such as the board of directors. JPMorgan failed to adhere to these requirements, and consequently misstated its financial results in public filings for the first quarter of 2012.
According to the SEC’s order, in late April 2012 after the portfolio began to significantly decline in value, JPMorgan commissioned several internal reviews to assess, among other matters, the effectiveness of the CIO’s internal controls. From these reviews, senior management learned that the valuation control group within the CIO – whose function was to detect and prevent trader mismarking – was woefully ineffective and insufficiently independent from the traders it was supposed to police. As JPMorgan senior management learned additional troubling facts about the state of affairs in the CIO, they failed to timely escalate and share that information with the firm’s audit committee.
Among the facts that JPMorgan has admitted in settling the SEC’s enforcement action:
The trading losses occurred against a backdrop of woefully deficient accounting controls in the CIO, including spreadsheet miscalculations that caused large valuation errors and the use of subjective valuation techniques that made it easier for the traders to mismark the CIO portfolio.
JPMorgan senior management personally rewrote the CIO’s valuation control policies before the firm filed with the SEC its first quarter report for 2012 in order to address the many deficiencies in existing policies.
By late April 2012, JPMorgan senior management knew that the firm’s Investment Banking unit used far more conservative prices when valuing the same kind of derivatives held in the CIO portfolio, and that applying the Investment Bank valuations would have led to approximately $750 million in additional losses for the CIO in the first quarter of 2012.
External counterparties who traded with CIO had valued certain positions in the CIO book at $500 million less than the CIO traders did, precipitating large collateral calls against JPMorgan.
As a result of the findings of certain internal reviews of the CIO, some executives expressed reservations about signing sub-certifications supporting the CEO and CFO certifications required under the Sarbanes-Oxley Act.
Senior management failed to adequately update the audit committee on these and other important facts concerning the CIO before the firm filed its first quarter report for 2012.
Deprived of access to these facts, the audit committee was hindered in its ability to discharge its obligations to oversee management on behalf of shareholders and to ensure the accuracy of the firm’s financial statements.
The SEC’s order requires JPMorgan to cease and desist from causing any violations and any future violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 13a-11, 13a-13, and 13a-15. The order also requires JPMorgan to pay a $200 million penalty that may be distributed to harmed investors in a Fair Fund distribution.
The SEC’s investigation, which is continuing, has been conducted by Michael Osnato, Steven Rawlings, Peter Altenbach, Joshua Brodsky, Joseph Boryshansky, Daniel Michael, Kapil Agrawal, Eli Bass, Sharon Bryant, Daniel Nigro, and Christopher Mele. The SEC appreciates the coordination of the U.K. Financial Conduct Authority, Federal Reserve, and Office of the Comptroller of the Currency as well as the assistance of the U.S. Attorney’s Office for the Southern District of New York, Federal Bureau of Investigation, Commodity Futures Trading Commission, and Public Company Accounting Oversight Board.
The Securities and Exchange Commission today charged JPMorgan Chase & Co. with misstating financial results and lacking effective internal controls to detect and prevent its traders from fraudulently overvaluing investments to conceal hundreds of millions of dollars in trading losses.
The SEC previously charged two former JPMorgan traders with committing fraud to hide the massive losses in one of the trading portfolios in the firm’s chief investment office (CIO). The SEC’s subsequent action against JPMorgan faults its internal controls for failing to ensure that the traders were properly valuing the portfolio, and its senior management for failing to inform the firm’s audit committee about the severe breakdowns in CIO’s internal controls.
JPMorgan has agreed to settle the SEC’s charges by paying a $200 million penalty, admitting the facts underlying the SEC’s charges, and publicly acknowledging that it violated the federal securities laws.
“JPMorgan failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses,” said George S. Canellos, Co-Director of the SEC’s Division of Enforcement. “While grappling with how to fix its internal control breakdowns, JPMorgan’s senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company’s problems and determine whether accurate and reliable information was being disclosed to investors and regulators.”
As part of a coordinated global settlement, three other agencies also announced settlements with JPMorgan today: the U.K. Financial Conduct Authority, the Federal Reserve, and the Office of the Comptroller of the Currency. JPMorgan will pay a total of approximately $920 million in penalties in these actions by the SEC and the other agencies.
According to the SEC’s order instituting a settled administrative proceeding against JPMorgan, the Sarbanes-Oxley Act of 2002 established important requirements for public companies and their management regarding corporate governance and disclosure. Public companies such as JPMorgan are required to create and maintain internal controls that provide investors with reasonable assurances that their financial statements are reliable, and ensure that senior management shares important information with key internal decision makers such as the board of directors. JPMorgan failed to adhere to these requirements, and consequently misstated its financial results in public filings for the first quarter of 2012.
According to the SEC’s order, in late April 2012 after the portfolio began to significantly decline in value, JPMorgan commissioned several internal reviews to assess, among other matters, the effectiveness of the CIO’s internal controls. From these reviews, senior management learned that the valuation control group within the CIO – whose function was to detect and prevent trader mismarking – was woefully ineffective and insufficiently independent from the traders it was supposed to police. As JPMorgan senior management learned additional troubling facts about the state of affairs in the CIO, they failed to timely escalate and share that information with the firm’s audit committee.
Among the facts that JPMorgan has admitted in settling the SEC’s enforcement action:
The trading losses occurred against a backdrop of woefully deficient accounting controls in the CIO, including spreadsheet miscalculations that caused large valuation errors and the use of subjective valuation techniques that made it easier for the traders to mismark the CIO portfolio.
JPMorgan senior management personally rewrote the CIO’s valuation control policies before the firm filed with the SEC its first quarter report for 2012 in order to address the many deficiencies in existing policies.
By late April 2012, JPMorgan senior management knew that the firm’s Investment Banking unit used far more conservative prices when valuing the same kind of derivatives held in the CIO portfolio, and that applying the Investment Bank valuations would have led to approximately $750 million in additional losses for the CIO in the first quarter of 2012.
External counterparties who traded with CIO had valued certain positions in the CIO book at $500 million less than the CIO traders did, precipitating large collateral calls against JPMorgan.
As a result of the findings of certain internal reviews of the CIO, some executives expressed reservations about signing sub-certifications supporting the CEO and CFO certifications required under the Sarbanes-Oxley Act.
Senior management failed to adequately update the audit committee on these and other important facts concerning the CIO before the firm filed its first quarter report for 2012.
Deprived of access to these facts, the audit committee was hindered in its ability to discharge its obligations to oversee management on behalf of shareholders and to ensure the accuracy of the firm’s financial statements.
The SEC’s order requires JPMorgan to cease and desist from causing any violations and any future violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 13a-11, 13a-13, and 13a-15. The order also requires JPMorgan to pay a $200 million penalty that may be distributed to harmed investors in a Fair Fund distribution.
The SEC’s investigation, which is continuing, has been conducted by Michael Osnato, Steven Rawlings, Peter Altenbach, Joshua Brodsky, Joseph Boryshansky, Daniel Michael, Kapil Agrawal, Eli Bass, Sharon Bryant, Daniel Nigro, and Christopher Mele. The SEC appreciates the coordination of the U.K. Financial Conduct Authority, Federal Reserve, and Office of the Comptroller of the Currency as well as the assistance of the U.S. Attorney’s Office for the Southern District of New York, Federal Bureau of Investigation, Commodity Futures Trading Commission, and Public Company Accounting Oversight Board.
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