Jamie Dimon, JP Morgan and the ‘Whale Trade’ Fallout
Last week, JP Morgan Chase settled with regulators in both the United States and United Kingdom over massive losses suffered in the 2012 “London Whale” trading fiasco. Chase, America‘s largest bank, fessed up to wrongdoing and agreed to pay a stiff $920 million fine. As part of the agreement, regulators agreed not to pursue further charges against Chase’s top brass.
Thus ends the biggest financial hiccup since Wall Street nearly tanked in 2008. The story begins in April of 2012, when Bruno Iksil, an obscure trader in the big bank’s London unit, got caught in a series of outsized derivatives trades that went bad. Fellow traders dubbed Iksil the “London Whale” for the monstrous size of his bad bets. Chase CEO Jamie Dimon was initially dismissive, calling the burgeoning scandal a “tempest in a teapot.”
Iksil escaped prosecution by cooperating with authorities. But two former employees in the London branch weren’t so lucky and are being prosecuted for falsifying books and regulatory filings in an effort to cover up the trader’s disastrous positions.
“The defendants deliberately and repeatedly lied about the fair value of assets on JPMorgan’s books in order to cover up massive losses that mounted up month after month,” Preet Bharara, the U.S. Attorney for the Southern District of New York, said when announcing the charges. “Those lies misled investors, regulators and the public, and they constituted federal crimes.”
Continue reading at U.S. News & World Report.