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JPMorgan's Top Compliance Officer Departs Bank

Joe Mont | February 26, 2014

Amid $23 billion in government fines and counting, JPMorgan Chase's chief compliance officer, Cindy Armine, has left that post, according to published reports. She will be replaced, on an interim basis, by Lou Rauchenberger, the current chief administrative officer.

Armine stepped into the bank's top compliance job in January 2013. The former head of global compliance for Citigroup, and a 31-year veteran at that bank, she joined JPMorgan in 2011 as part of an effort to overhaul risk controls in its mortgage businesses. Her time there was a tumultuous one, however, with a flurry of headline-grabbing accusations against the bank and record-setting government fines.

In January, the bank agreed to pay $1.7 billion as part of a deferred prosecution agreement with the U.S. Attorney's office for the Southern District of New York over allegations that its failure to maintain an effective anti-money laundering program facilitated the multibillion-dollar Ponzi Scheme orchestrated by infamous New York broker Bernard Madoff.

Calling it the largest settlement with a single entity in American history, the Justice Department in November announced a $13 billion settlement to resolve claims related to its packaging, marketing, sale, and issuance of residential mortgage-backed securities. In September 2013, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency hit the bank with $389 million in fines for deceptive credit card practices.

Most notably, throughout the latter months of 2013, the bank was targeted by international regulators over a $6 billion loss in its derivatives portfolio that was blamed on out-sized bets now known as the “London Whale” trades. Those trades, regulators say, were the result of manipulated and ignored risk controls and the bank has thus far paid $920 million in fines over it.

In addition to cutting checks to regulators, JPMorgan also announced, under Armine's watch, that it would spend an additional $4 billion on compliance and risk management efforts, including $1.5 billion on risk management and regulatory compliance efforts, including increasing its risk-control staff by 30 percent.  The bank also announced plans to assign 3,000 employees to its “control staff” to work on legal and regulatory matters.