The SEC said Thursday it charged JPMorgan Chase & Co. withmisstating financial results and lacking effective internalcontrols to detect and prevent its traders from fraudulentlyover-valuing investments to conceal hundreds of millions of dollarsin trading losses.

JPMorgan has agreed to settle the SEC's charges by paying a $200million penalty, admitting the facts underlying the SEC's charges,and publicly acknowledging that it violated the federal securitieslaws, the SEC said.

As part of a coordinated global settlement, three other agenciesalso announced settlements with JPMorgan Thursday: the U.K.Financial Conduct Authority, the Federal Reserve, and the Office ofthe Comptroller of the Currency.

JPMorgan will pay a total of approximately $920 million inpenalties in these actions by the SEC and the other agencies, theSEC said.

The SEC previously charged two former JPMorgan traders withcommitting fraud to hide the massive losses in one of the tradingportfolios in the firm's chief investment office. The SEC'ssubsequent action against JPMorgan faults its internal controls forfailing to ensure that the traders were properly valuing theportfolio, and its senior management for failing to inform thefirm's audit committee about the severe breakdowns in CIO'sinternal controls.

According to the SEC's order instituting a settledadministrative proceeding against JPMorgan, the Sarbanes-Oxley Actof 2002 established important requirements for public companies andtheir management regarding corporate governance and disclosure.

Public companies such as JPMorgan are required to create andmaintain internal controls that provide investors with reasonableassurances that their financial statements are reliable, and ensurethat senior management shares important information with keyinternal decision makers such as the board of directors, the SECsaid.

The agency said JPMorgan failed to adhere to these requirements,and consequently misstated its financial results in public filingsfor the first quarter of 2012.

According to the SEC's order, in late April 2012 after theportfolio began to significantly decline in value, JPMorgancommissioned several internal reviews to assess, among othermatters, the effectiveness of the CIO's internal controls, the SECsaid.

From these reviews, senior management learned that the valuationcontrol group within the CIO – whose function was to detect andprevent trader mismarking – was woefully ineffective andinsufficiently independent from the traders it was supposed topolice, the SEC said.

As JPMorgan senior management learned additional troubling factsabout the state of affairs in the CIO, they failed to timelyescalate and share that information with the firm's auditcommittee, according to the SEC.