2012 JPMorgan Chase trading loss

"London whale" redirects here. For the whale lost in the River Thames in 2006, see River Thames whale.

In April and May 2012, large trading losses occurred at JPMorgan's Chief Investment Office, based on transactions booked through its London branch. The unit was run by Chief Investment Officer Ina Drew, who later stepped down. A series of derivative transactions involving credit default swaps (CDS) were entered, reportedly as part of the bank's "hedging" strategy.[1] Trader Bruno Iksil, nicknamed the London Whale, accumulated outsized CDS positions in the market. An estimated trading loss of $2 billion was announced. However, the loss amounted to more than $6 billion for JPMorgan Chase.[2][3]

These events gave rise to a number of investigations to examine the firm's risk management systems and internal controls. JPMorgan Chase agreed to pay $920 million in total fines to US and UK authorities.[4][5][6] JPMorgan Chase cut chief executive Jamie Dimon's 2012 pay in half, from $23 million to $11.5 million, as a consequence for the $6 billion trading loss.[7][8]

  1. ^ "JPMorgan discloses $2B in losses in 'flawed' hedging strategy". NBC. 10 May 2012. Retrieved 17 August 2012.[permanent dead link]
  2. ^ "The London Whale". Bloomberg. February 24, 2016. Retrieved 2019-06-27.
  3. ^ Merle, Renae (April 13, 2017). "The 'London Whale' trader lost $6.2 billion, but he may walk off scot-free". Washington Post. Retrieved June 27, 2019.
  4. ^ Zarolli, Jim (September 19, 2013). "JPMorgan Chase To Pay Huge Fine In London Whale Settlement". NPR. Retrieved 2019-06-27.
  5. ^ "JPMorgan admits wrongdoing in 'London whale' trading scandal, fined more than $900m". ABC News. Reuters / Agence France-Presse. 2013-09-20 [2013-09-19]. Retrieved 2019-06-27.
  6. ^ Rushe, Dominic (2013-09-19). "London Whale scandal to cost JP Morgan $920m in penalties". The Guardian. ISSN 0261-3077. Retrieved 2019-06-27.
  7. ^ "JPMorgan CEO gets pay cut by half after $6 billion loss". CBS News. January 16, 2013. Retrieved 2019-06-27.
  8. ^ Rexrode, Christina (January 16, 2013). "JPMorgan Chase cuts CEO Dimon's pay in half". Newsday. Retrieved 2019-06-27.