JP Morgan’s $2B Blunder Subject of Probe
JPMorgan Chase & Co. $2 billion trading loss is now reportedly the subject of a criminal probe by the U.S. Department of Justice and the Federal Bureau of Investigation in New York. Both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission – which regulates derivatives trading – also are examining the bank’s trading activities, according to various news reports.
The loss in question was the result of actions by a trader in London who guessed wrong regarding complicated trades that were tied to the values of corporate bonds. The mistake then caused massive losses in JP Morgan’s derivative positions.
JP Morgan CEO Jamie Dimon called the trades “flawed, complex, poorly reviewed, poorly executed and poorly monitored,” adding that mistake should never have happened.
But happen it did, and shareholders are now paying the price. According to Reuters, JP Morgan has lost $15 billion in market value since announcing the $2 billion loss. Meanwhile, Standard & Poor’s revised its outlook on the bank from stable to negative.