There is a new twist in the London Whale trading scandal that cost JPMorgan Chase US$6.2 billion in trading losses last year. Some of the firm’s own traders bet against the very derivatives positions placed by its chief investment office (CIO), three people familiar with the matter said.
The US Senate Permanent Committee on Investigations, which launched an inquiry into the trading loss last fall, is looking into the how different divisions of the bank wound up on opposite sides of the same trade, one of the people familiar with the matter said.
The people familiar with the situation did not comment on the dollar value of the opposing trades placed by JPMorgan Chase & Co’s investment bank traders, which was much smaller than the total positions put on by the CIO.
Kristin Lemkau, a spokeswoman for JPMorgan, declined to comment on the investment bank’s trading positions.
A spokeswoman for the Senate committee, led by Democratic Senator Carl Levin, declined to comment on its investigation.
It was widely known that a group of about eight credit-focused hedge funds, such as BlueMountain Capital Management and Saba Capital Management, were on the other side of the trades that JPMorgan’s London-based Whale team made on an index tied to corporate default rates.
However, the role JPMorgan’s own investment bank may have played in the messy unwinding of the derivatives trade has not come out until now.
One of the three people familiar with the matter claimed that JPMorgan managers discussed merging the two sets of trades in an attempt to offset some of the CIO’s losses.
Those talks ended about a month before Bloomberg News first reported the CIO trades on April 5 last year, the source said.
JPMorgan’s Lemkau said that this “never came up in our exhaustive internal investigation.”
In July last year, the bank fired the three London-based traders in the CIO most closely tied to the trading, including Bruno Iksil, dubbed the London Whale by hedge fund traders because of the size of the trades he placed for the CIO.
Two people familiar with Iksil and his boss, Javier Martin-Artajo, said the two CIO employees complained about the investment bank’s actions last spring, accusing its traders of deliberately trying to move the market against the CIO by leaking information on its position to hedge funds.
Iksil made his complaint to a member of JPMorgan’s compliance department, one of the people said.
However, those same sources said they had not seen any evidence to support that claim and JPMorgan’s Lemkau declined to comment on the allegation.
Martin-Artajo’s lawyer did not respond to a request for comment. A lawyer for Bruno Iksil declined to comment.
It is not clear when the investment bank traders and the London Whale team became aware they were taking opposing sides on a trade that involved index linked to credit default swaps sold on corporate debt.
Federal authorities are currently investigating whether some employees in the CIO deliberately used misleading valuations to try to conceal some of the losses.
It is not uncommon for large banks to hold opposing positions in the same market. That is sometimes done as a way of hedging a position or because different trading desks formulate opposing views about a trade.
Still, the revelation that the bank was taking two sides on the same trade is also likely to rekindle the debate about whether banks such as JPMorgan Chase are too big to manage and should be scaled back.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
RSS