J.P. Morgan’s $2 Billion Blunder

Bank Admits Losses on Massive Trading Bet Gone Wrong; Dimon’s Mea Culpa

Dan Fitzpatrick, Gregory Zuckerman and Liz Rappaport
The Wall Street Journal
5/10/2012

A massive trading bet boomeranged on J.P. Morgan Chase & Co., leaving the bank with at least $2 billion in trading losses and its chief executive, James Dimon, with a rare black eye following a long run as what some called the “King of Wall Street.”

The losses stemmed from wagers gone wrong in the bank’s Chief Investment Office, which manages risk for the New York company. The Wall Street Journal reported early last month that large positions taken in that office by a trader nicknamed “the London whale” had roiled a sector of the debt markets.

The bank, betting on a continued economic recovery with a complex web of trades tied to the values of corporate bonds, was hit hard when prices moved against it starting last month, causing losses in many of its derivatives positions. The losses occurred while J.P. Morgan tried to scale back that trade…

The article continues at The Wall Street Journal.

 

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