Senate Investigation Reveals JPMorgan (JPM) Sought to Hide 'London Whale' Losses, Skirt Regulation
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JPMorgan Chase & Co. (JPM) is slumping in late trading amid new capital actions, which include a $6 billion stock buyback as well as 38 cent quarterly dividend, as a Senate subcommittee breathed fire at the bank over its CIO loss last year.
The 301-page report by the Senate Permanent Subcommittee on Investigations said JPMorgan withheld key information and "mischaracterized high-risk trading as hedging." Committee chairman Sen. Carl Levin said that JPMorgan "piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public."
Last May, JPMorgan CEO Jamie Dimon disclosed major losses in the banks CIO unit. Though initial estimates were for a couple of billion, the unit ended up losing more than $6.2 billion over the next few quarters as trades were wound down. Trades were put in by Bruno Iksil, nicknamed the London Whale, for the large and highly-levered trades undertaken. From an initial book size of $51 billion in late 2011, the book grew to over $157 billion by March 2012.
Since the event and initial Senate hearings, JPMorgan management has worked to acknowledge mistakes and make corrections. Ina Drew, formerly in charge of the CIO unit, resigned just four days following disclosure last year. She'll be testifying tomorrow at a subcommittee hearing.
The Senate Subcommittee said it combed through 90,000 pages of documents, not to mention conduction countless interviews with executives, current, and former employees before issuing its report.
JPMorgan shares are down about 2 percent Thursday night.
The 301-page report by the Senate Permanent Subcommittee on Investigations said JPMorgan withheld key information and "mischaracterized high-risk trading as hedging." Committee chairman Sen. Carl Levin said that JPMorgan "piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public."
Last May, JPMorgan CEO Jamie Dimon disclosed major losses in the banks CIO unit. Though initial estimates were for a couple of billion, the unit ended up losing more than $6.2 billion over the next few quarters as trades were wound down. Trades were put in by Bruno Iksil, nicknamed the London Whale, for the large and highly-levered trades undertaken. From an initial book size of $51 billion in late 2011, the book grew to over $157 billion by March 2012.
Since the event and initial Senate hearings, JPMorgan management has worked to acknowledge mistakes and make corrections. Ina Drew, formerly in charge of the CIO unit, resigned just four days following disclosure last year. She'll be testifying tomorrow at a subcommittee hearing.
The Senate Subcommittee said it combed through 90,000 pages of documents, not to mention conduction countless interviews with executives, current, and former employees before issuing its report.
JPMorgan shares are down about 2 percent Thursday night.
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