JPMorgan Chase & Company is the largest financial holding company in the United States, with $2.4 trillion in assets. It is also the largest derivatives dealer in the world and the largest single participant in world credit derivatives markets. JPMorgan Chase has consistently portrayed itself as an expert in risk management with a "fortress balance sheet" that ensures taxpayers have nothing to fear from its banking activities, including its extensive dealing in derivatives. But in early 2012, the bank's Chief Investment Office (CIO), which is charged with managing $350 billion in excess deposits, placed a massive bet on a complex set of synthetic credit derivatives that, in 2012, lost at least $6.2 billion. The CIO's losses were the result of the so-called "London Whale" trades executed by traders in its London office; trades so large in size that they roiled world credit markets. This book provides an overview and background of the investigation of derivatives risks and abuses relating to the JPMorgan Chase Whale traders with accompanying testimony given before the Permanent Subcommittee on Investigations.
jpmorgan chase whale trades
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|Book Title||: JPMorgan Chase Whale Trades|
|Author||: United States. Congress. Senate. Committee on Homeland Security and Governmental Affairs. Permanent Subcommittee on Investigations|
|Release Date||: 2013|
|Available Language||: English, Spanish, And French|
"The JPMorgan Chase whale trades provide a startling and instructive case history of how synthetic credit derivatives have become a multi-billion dollar source of risk within the U.S. banking system. They also demonstrate how inadequate derivative valuation practices enabled traders to hide substantial losses for months at a time; lax hedging practices obscured whether derivatives were being used to offset risk or take risk; risk limit breaches were routinely disregarded; risk evaluation models were manipulated to downplay risk; inadequate regulatory oversight was too easily dodged or stonewalled; and derivative trading and financial results were misrepresented to investors, regulators, policymakers, and the taxpaying public who, when banks lose big, may be required to finance multi-billion-dollar bailouts"--Pg. 7.
Please note that the content of this book primarily consists of articles available from Wikipedia or other free sources online. Pages: 27. Chapters: 2011 UBS rogue trader scandal, 2012 JPMorgan Chase trading loss, Anthony Elgindy, Brian Hunter (trader), Bruno Iksil, Jerome Kerviel, John Rusnak, List of trading losses, Nick Leeson, Robert Citron, Sumitomo copper affair, Toshihide Iguchi, Yasuo Hamanaka. Excerpt: 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 has since stepped down. A series of derivative transactions involving credit default swaps (CDS) were entered into, reportedly as part of the bank's "hedging" strategy. Trader Bruno Iksil, nicknamed the London Whale, accumulated outsized CDS positions in the market. The original estimated trading loss of $2 billion was announced, with the final actual loss expected to be substantially larger. A number of investigations will examine the firm's risk-management system and its internal controls. In February 2012, hedge fund insiders such as Boaz Weinstein of Saba Capital Management became aware that the market in credit default swaps was possibly being affected by aggressive trading activities. The source of the unusual activity turned out to be Bruno Iksil, a trader for JPMorgan Chase & Co. and referred to as "the London Whale" in reference to the huge positions he was taking. Heavy opposing bets to his positions are known to have been made by traders, including another branch of JPMorgan, who purchased the derivatives JPMorgan was selling in such high volume. Early reports were denied and minimized by the firm in an attempt to minimize exposure. Major losses, $2 billion, were reported by the firm in May, 2012 in relationship to these trades; on July 13, 2012 the total loss was updated to $5.8 billion with the addition of a $4.4 billion loss in the second...
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