|JP Morgan Loses $2 Billion in Trade Scheme|
|by Tom McGregor||Thu, May 10, 2012, 06:24 PM|
Late Thursday, JP Morgan disclosed that one of its units suffered a significant loss due to soured bets that sent its shares plummeting in post-market trading.Fox News reports that, “Chief Executive Officer Jamie Dimon said in a hastily scheduled conference call after the close of trading that the company had sustained some $2 billion in trading losses in its synthetic credit portfolio in the past six weeks. The portfolio proved to be “riskier, more volatile and less effective as an economic hedge” than the bank initially believed, according to a regulatory filing.”
Dimon told Dow Jones Newswires that the trade that originated from its Chief Investment Office and was “flawed, complex and poorly reviewed … The mistake was egregious.”
According to Fox News, “the Corporate/Private Equity group that the CIO office resides in it’s now expected to lose the biggest U.S. bank by assets $800 million in the second quarter, up from a previous estimate of $200 million. Dimon warned that the situation can get worse as a result of market volatility.”
The office generally helps to hedge risks and manage the enormous balance sheet of the bank. Dimon claimed the trades did not violate the Volcker rule, which regulates proprietary trading at banks. The Securities and Exchange Commission and the Federal Reserve, both refused to comment on the matter.
To read the entire article from Fox News, link here:
|< Prev||Next >|