JPMorgan Chase Trading Loss: Jamie Dimon Testimony - Financial Services (2012)
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In April and May 2012, large trading losses occurred at JPMorgan's Chief Investment Office, based on transactions booked through its London branch. More on Dimon: https://www.amazon.com/gp/search?ie=UTF8&tag=doc06-20&linkCode=ur2&linkId=c1f6549e80b26a86c02cda351cc46a2e&camp=1789&creative=9325&index=books&keywords=jamie%20dimon The unit was run by Chief Investment Officer Ina Drew, who has since stepped down. A series of derivative transactions involving credit default swaps (CDS) were entered, reportedly as part of the bank's "hedging" strategy.[1] Trader Bruno Iksil, nicknamed the London Whale, accumulated outsized CDS positions in the market. An estimated trading loss of $2 billion was announced, with the actual loss expected to be substantially larger. These events gave rise to a number of investigations to examine the firm's risk management systems and internal controls. In February 2012, hedge fund insiders such as Boaz Weinstein of Saba Capital Management[2][3] became aware that the market in credit default swaps was possibly being affected by aggressive trading activities. The source of the unusual activity turned out to be Bruno Iksil, a trader for JPMorgan Chase & Co. Heavy opposing bets to his positions had been made by traders, including another branch of JPMorgan, who purchased the derivatives that JPMorgan was selling in such high volume.[4][5] Early reports were denied and played down by the firm in an attempt to minimize exposure.[6] Major losses of $2 billion were reported by the firm in May 2012 in relation to these trades. On July 13, 2012, the total loss was updated to $5.8 billion with the addition of a $4.4 billion loss in the second quarter and subsequent recalculation of a loss of $1.4 billion for the first quarter. A spokesman for the firm claimed that projected total losses could be more than $7 billion.[7] The disclosure, which resulted in headlines in the media, did not disclose the exact nature of the trading involved, which remained in progress as of May 16, 2012 as JPMorgan's losses mounted and other traders sought to profit or avoid losses resulting from JPMorgan's positions.[8][9] As of June 28, 2012, JPMorgan's positions were continuing to produce losses which could total as much as $9 billion under worst-case scenarios.[10] The trades were possibly related to CDX IG 9, a credit default swap index based on the default risk of major U.S. corporations[11][12] that has been described as a "derivative of a derivative".[13][14] On the company's emergency conference call, JPMorgan Chase CEO Jamie Dimon said the strategy was "flawed, complex, poorly reviewed, poorly executed, and poorly monitored".[15] The episode is being investigated by the Federal Reserve, the SEC, and the FBI.[16] On February 2, 2012, at the Harbor Investment Conference, speaking to an audience of investors, Boaz Weinstein recommended buying the Markit CDX North America Investment Grade Series 9 10-Year Index, CDX IG 9.[17] This is a derivative that measures the spread (difference in interest rates) between the interest rates of investment-grade worthy companies and the London Interbank Offered Rate (LIBOR). This was a derivative which Weinstein had noticed to be losing value in a manner and to a degree which seemed to diverge from market expectations. It turned out that JPMorgan was shorting the index by making huge trades.[18] [19] JPMorgan's bet was that credit markets would strengthen; the index is based on 121 investment grade bonds issued by North American corporations.[17] Investors who followed Weinstein's tip did poorly during the early months of 2012 as JPMorgan strongly supported its position. However by May after investors became concerned about the implications of the European financial crisis the situation reversed and JPMorgan suffered large losses. In addition to Weinstein's Saba Capital Management, Blue Mountain Capital, BlueCrest Capital, Lucidus Capital Partners, CQS, III, and Hutchin Hill[20] are hedge funds which are known to have benefited from taking the other side of the trade to JPMorgan.[2] A separate unit of JPMorgan was also on the winning side. The $2 billion loss came from three positions which partially offset each other. It occurred when the world's financial markets were in relative calm. Had quality spread curves twisted or worldwide economic distress been more pronounced the loss could have been much higher. The Financial Times "Alphaville" analysis suggests that these positions were not volatile enough to account for the full losses reported.[21] They suggest that other positions are likely involved as well. The internal investigation concluded in July 2012. It involved more than 1,000 people across the firm and outside law firm WilmerHale. http://en.wikipedia.org/wiki/2012_JPMorgan_Chase_trading_loss Image By Steve Jurvetson (Flickr: Jamie Dimon, CEO of JPMorgan Chase) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
Comments
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Fuck him...Put them all under oath...lying Dicks...
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whats up with these stupid questions? e.g., 53:23
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Dimon is the most corrupt bank CEO ever, remember that somebody has to pay the bill for losses. "Clients" and "Government" pays for this highroller gambling addict.
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Steal a little money, go to jail. Steal a LOT of money, you're a banker!!
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I would be very interested to see who Michael Grimms campaign contributors are. I'd be surprised if JP Morgan wasn't one of them.
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Barney Frank is a fucking demagogue, let the guy answer FFS
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The Henry Kissinger of the finance world, Dimon is totally corrupt !!
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Lets see we have to bail out bad boy Dimon due to hedging in London doing business there with Europe???? But American taxpayers have to pay for his gambling problems?
I am not Jamie Dimon's daddy...ok....kick him to the curb. -
People, please read "The Creature from Jekyl Island" and learn the truth about the so called Federal Reserve, it isn't Federal at all, it is a scam, making money out of thin air by Rothchild and friends...get educated, we are going down too fast,
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OK who put the hex on him to give him throat cancer?? Fess up people!!
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this lunatic psychopath came out from under a rock during the crisis and stole WaMu and honest company and started raping and pilaging...they do not even keep accurate records, I overpaid on 6 mortgages and my next statement didn't reflect the extra money.
I called them and they said the extra went for "fees" no accounting and no credit, this is Jamie Dimon's flakey way of doing banking...numbers do not matter...
do not do business with this filth...
He just said he knows he makes mistakes and will continue to make mistakes, what the hell, numbers are numbers, you as a bank are not allowed "mistakes" You also are not to suck up tax money to pay for your gambling propensities... -
THIS ANIMAL should be castrated....so proliferation of such breed will be annihilated.
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Not one of my best hearings, I get nervous sometimes with all the cameras.
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JAMIE DIMON IS A THIEF, STEALING HOMES, USING ROBO SIGNING, COERCING WITH CITIES AND COUNTIES TO PAY TAXES ON A PROPERTY HE NEVER HAD A CONTRACT ON, JUDGES GET'N KICK BACKS OFF THE EBT CARDS, MAKING THEM BIASED AGAINST HOME OWNERS, XEROX MAKES EM, JPM UPLOADS THEM. CROOKED SYSTEM. FAKE DOCUMENTS SUBMITTED TO CROOKED JUDGE'S AND THERE YA GO. I'M IN MY 29TH DAY SIEGE, COME HELL OR HIGH WATER, I WILL STAND FOR AS LONG AS I CAN. FCK U JAMIE DIMON YOU SNAKE IN THE GRASS.
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if this guy wants the u.s to stay out of regulations so they can operate under the same guidlines as other banks in europe so that they can compete, why dont they just create a separate company in europe that isnt linked with their company in the u.s and not worry about it? am i wrong or does what i say make sense
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No such thing as a financial "product" in the sense he means it. A silver quarter can be called a financial product. Cash and checks and credit cards are not "products." They are financial instruments. Would you say someone who cuts your lawn provided a product or a service? Never a product, always a service. Depositing a check is a service---not a product. You do not exit any bank with any "product." You leave retail stores with "products." He misrepresents when it comes to splitting hairs, but what about the things he never says? Like this thing he's a member of that refuses to release lists? That lets Bilderberg out, folks. Why are you worrying about that one? The other one runs Bilderberg as a mere subsidiary to distract the simple.
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