News Column

JPMorgan Chase Slammed for Lying, Hiding Losses

March 15, 2013
JP Morgan

JPMorgan Chase & Co ignored its own internal controls and misled investors and regulators to engage in high-risk derivatives trading, leading to 6.2 billion dollars in losses last year, a US congressional investigation found.

Executives at the largest US bank, including chief executive Jamie Dimon, knew about the losses, hid them and downplayed them as JPMorgan Chase withheld critical information about the trades from its main regulator, the Senate Permanent Subcommittee on Investigations said Thursday.

Its report also blamed regulators for not providing enough oversight and allowing the New York-based bank to take on so much risk in synthetic credit securities, which are derivative investments tied to credit performance.

At the centre of the losses was Bruno Iksil, the "London Whale," a trader in the British capital so named because his trades were so large they agitated world credit markets.

"We found a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public," Senator Carl Levin, subcommittee chairman, said after a nine-month investigation.

The losses tarnished JPMorgan Chase's reputation as one of the best-managed banks in the world, cost some top executives their jobs and rekindled memories of the banking sector speculation that paved the way for the 2008 financial crisis.

The bank said it had already identified some of the problems singled out in the report and was working to remedy them.

"While we have repeatedly acknowledged significant mistakes, our senior management acted in good faith and never had any intent to mislead anyone," bank press officers said.

However, subcommittee member John McCain charged that JPMorgan Chase had "gambled away billions of dollars through risky and exotic trades" and showed "complete disregard for risk management procedures and regulatory oversight."

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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