JP Morgan Misled Regulator, Investors

Senate report charges CEO Dimon sought to hide escalating trading losses on derivatives bet.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon sought to hide escalating trading losses that surpassed $6.2 billion, misled investors and dodged regulators as a “monstrous” derivatives bet deteriorated last year, a Senate probe found.

The largest U.S. bank “mischaracterized high-risk trading as hedging,” and withheld key information from its primary regulator, sometimes at Dimon’s behest, according to a report yesterday by the Senate Permanent Subcommittee on Investigations. The 301-page document also shows how managers manipulated internal risk models and pressured traders to overvalue their positions in an effort to hide growing losses in a credit derivatives portfolio in London.

Synthetic Credit

 

‘Getting Idiotic’

“I can’t keep this going, we do a one-off at the end of the month to remain calm,” Iksil told Grout in discussing a price adjustment that the report said was apparently requested by Martin-Artajo.

Pay Clawbacks

Iksil, Macris and Martin-Artajo were all forced out of their jobs. The bank told the panel it clawed back the maximum amount permitted under its employment policies with them, or about two years of compensation. The bank canceled outstanding incentive compensation and obtained repayment of previous awards. Drew forfeited about $21.5 million.

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