“J.P. Morgan Chase & Co. was downgraded in a confidential government scorecard over concerns about the company’s management and its board, a blow to a firm that has long been considered one of the best-run on Wall Street.

“The New York company’s management rating from the Office of the Comptroller of the Currency fell one notch last July to a level that signifies oversight “needs improvement,” following the revelation of what are known as the “London whale” trading losses, said people familiar with the regulatory assessment.

“Grading is on a scale of 1 to 5, with 5 being worst. J.P. Morgan had been at level 2, indicating “satisfactory management.” The people said the downgrade to level 3 wasn’t solely related to a London employee’s large trades—in indexes tracking the health of a group of companies—that led to losses exceeding $6 billion.

“The downgrade marks an unusual setback for a bank that last year reported record profit of $21.3 billion and bears a stock-market value of $187 billion, second only among U.S. financial companies to Wells Fargo & Co.’s $198 billion.”

***

Read full Wall Street Journal article here