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Entries in JPMorgan (7)

Friday
Jul132012

JPMorgan Executive Pay ‘Clawbacks’ Revealed

Chris Hondros/Getty Images(NEW YORK) -- JPMorgan Chase has initiated compensation clawbacks related to its $5.8 billion trading loss, after announcing that some employees may have intentionally tried to hide the bad trades.

Ina Drew, who formerly led JPMorgan Chase’s chief investment office that was responsible for the bank’s trading loss, has agreed to forfeit two years worth of compensation, though her severance amount has not been reported yet.

JPMorgan Chase accepted that offer, the maximum clawback allowable under the firm’s employment policy, said company spokesman Joe Evangelisti, according to Bloomberg News.

Other managers in the London-based chief investment office left the company without severance and will have to forfeit up to two years of compensation.

Earlier on Friday, JPMorgan Chase reported second-quarter profit of $5 billion and that the losses on the CIO’s synthetic credit portfolio was $4.4 billion for the period.  The trading loss cut profits by nine percent for the quarter.

[CLICK HERE TO SEE JPMORGAN'S EARNINGS REPORT]

The bank’s shares rose six percent to $36 Friday after officials said the trading loss would be no more than $7.5 billion.

Copyright 2012 ABC News Radio

Friday
Jul132012

JPMorgan Reports $5B Profit, Expands Trading Loss

Peter Foley/Bloomberg via Getty Images(NEW YORK) -- JPMorgan Chase, still reeling from trading losses in its investment unit, reported a second-quarter profit of $5 billion on Friday.

Investors were less interested in the largest U.S. bank’s net income than the total losses from bad hedged bets in their chief investment office. They announced that the loss this quarter from that the trade was $4.4 billion; estimates had the loss in the range anywhere from $2 billion to $9 billion.  The bank has yet to make clear if there is a possibility of incurring more loss.

[CLICK HERE TO SEE JPMORGAN'S EARNINGS REPORT]

In a surprise announcement in a Securities and Exchange Commission filing ahead of the earnings report, JP Morgan revised its first-quarter earnings to show an additional loss because traders in the CIO unit were misrepresenting the extent of the losses.

According to the SEC filing, “… the firm has recently discovered information that raises questions about the integrity of the trader marks and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter.”

Jim Sinegal, director of financial services research at Morningstar, an investment firm, said the most important discovery from the earnings release is whether the loss is in line with what the company has recently described; that is, whether the problem has been contained.

CEO Jamie Dimon was previously criticized for describing the trading loss as a “tempest in a teapot,” before he later acknowledged that the losses were greater than he was told by his management. His chief investment officer, Ina Drew, resigned in May.

“What Jamie Dimon has done well is under promise and over deliver,” Sinegal said.  “Not only has this escaped his eye as a risk manager -- but to the extent that it got out of hand more than once, if it turns out even bigger than that, you have to wonder if he has as much control as everyone believes him to have.”

“A loss of $5 billion or more would surprise me,” Sinegal said. “I think you would have to reassess your opinion of Dimon and all top risk managers.  It is generally well accepted that JPMorgan has done the best job managing risk of the large banks.”

Copyright 2012 ABC News Radio

Thursday
Jun282012

Report: JPMorgan Chase Trading Loss Could Rise to $9 Billion

Peter Foley/Bloomberg via Getty Images(NEW YORK) -- Trading losses at JPMorgan Chase may be much bigger than previously thought.

Citing people familiar with the matter, The New York Times reports the bank's losses may have ballooned to as much as $9 billion.  Previous reports had the estimate at $2 billion and counting.

The sources tell the newspaper "the red ink has been mounting in recent weeks, as the bank has been unwinding its positions."

In May, JPMorgan traced its loss to losing bets on "synthetic credit securities" -- the same kind of instruments that nearly led to a collapse of the financial system in 2008, prompting a nearly $1 trillion government bailout.

The mishandled trade has added to the debate over bank regulations, and whether some "too big to fail firms" are making very risky trades.

Copyright 2012 ABC News Radio

Tuesday
May152012

Reid Says JPMorgan Should ‘Take Their Business to Las Vegas’

Alex Wong/Getty Images(WASHINGTON) -- Senate Majority Leader Harry Reid, D-Nev., suggested Tuesday that JPMorgan “take their business to Las Vegas,” after the bank’s $2 billion loss stemming from bad trades.

“Because it’s just a gamble,” the Nevada senator said Tuesday. “It’s one of the things that’s clear that they were betting like they would do at a crap table in Las Vegas. And they bet the wrong way....If they make a bad bet Uncle Sam is there. We’ve got to stop that.”

Reid said he has great respect for JPMorgan Chase CEO Jamie Dimon, but “this is a bad deal.”

The majority leader is expected to force a vote, perhaps as early as this week, on two nominees to the Federal Reserve Board, a move influenced in part by the trading loss at JPMorgan.

“It’s important that we have a fully functioning Fed,” Reid said, “The Fed, who's responsible for drawing up those rules, should have been done a long time ago.”

Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday that it is his impression that there is “bipartisan support” for both nominees in the Senate despite Sen. David Vitter’s, R-La., objection to a full vote in the Senate.

Copyright 2012 ABC News Radio

Friday
May112012

Stocks Affected by JPMorgan Loss

Hemera/Thinkstock(NEW YORK) -- Stunning news from the nation's biggest bank prompted a sell off to end the week.

The Dow closed down 24 points at 12,832 Friday. The Nasdaq finished up with a modest six point gain at 2,940, while the S&P lost three points, closing at 1,356.

JP Morgan stunned the financial world with news of a $2 billion trading loss. The SEC is looking into it, but CEO Jamie Dimon says the bank has more than enough money to handle the risk.  He also says that customers will not be affected by the loss.

The producer price index dropped two tenths of a percent last month.  It measures price changes before they reach the consumer and it was the biggest drop since October. Declines were driven mainly by falling gas and energy prices.  

Copyright 2012 ABC News Radio

Friday
May112012

JPMorgan Trading Loss Roils Markets, Raises Fears About Bank Risks

STAN HONDA/AFP/Getty Images(NEW YORK) -- JP Morgan Chase & Co. is rocking the financial markets with the disclosure that its in-house trading operating lost $2 billion in the past six weeks, raising new questions about whether the big banks that caused the financial meltdown have sufficiently changed their ways.

Chief Executive Officer Jamie Dimon said the trading loss was an "egregious" failure in a unit managing risks, but he added in a call with analysts after the markets closed Thursday that just because the bank did something "stupid" that doesn't mean other firms are having such trouble.

"There were many errors, sloppiness and bad judgment," Dimon said.  "These were grievous mistakes, they were self-inflicted."

Congress and the FDIC have been grappling with how to prevent "too big to fail" institutions from taking big risks knowing that the U.S. Treasury is there to back them up.

JPMorgan, the largest U.S. bank, traced its big loss to the firm's chief investment office, run by Ina Drew.  His unit made losing bets on "synthetic credit securities" -- the same kind of instruments that nearly led to a collapse of the financial system in 2008, prompting a nearly $1 trillion government bailout.

Global markets fell on Friday after the big surprise trading loss at JPMorgan Chase shook investor confidence, while political chaos in Greece continued to cast uncertainty over its future in the euro currency bloc.

JPMorgan stock plunged almost 7 percent in after-hours trading, and the unexpected loss at one of the world's most venerated banks undermined investor confidence.  British banks were hit hard -- Barclays, which has a large investment banking arm, was the biggest loser in London trading, down 2.9 percent by midmorning.

In Europe, the FTSE 100 index of leading British shares dropped 0.3 percent at 5,525, while Germany's DAX fell 0.3 percent too to 6,498.  The CAC-40 in France was 0.7 percent lower at 3,107.

The euro was up 0.2 percent at $1.2952, though still near four-month lows against the dollar.

Wall Street headed for a lower opening on Friday, with both Dow futures and S&P 500 futures down 0.5 percent.

Copyright 2012 ABC News Radio

Thursday
May102012

JPMorgan Bank Announces Massive Surprise Loss

STAN HONDA/AFP/Getty Images(NEW YORK) -- JPMorgan, in an unexpected announcement, said it saw $2 billion in trading losses in the last six weeks, and may yet see more.

“We have egg on our face,” Jamie Dimon, the massive bank’s CEO, said on a conference call.  “We deserve any criticism we get.”

JPMorgan’s stock was trading about six percent lower in after-hours trading and could very well drag down markets on Friday.

In recent weeks, the financial papers, particularly The Wall Street Journal, have been reporting on how the “London whale,” a trader or traders at JPMorgan’s London operations, has been distorting credit markets with big bets.

Now, apparently, those big bets mean a big hole for JPMorgan.

It is “striking how management and company downplayed the actions of this unit” before coming clean with the losses Thursday, said Todd Hagerman, a senior banking analyst with Sterne Agee.

JPMorgan, one of the largest banks in the world, has $1.4 trillion in assets under management. That figure is equivalent to the gross domestic product of Spain, a country whose financial predicament is worrying global markets right now -- though nobody is saying JPMorgan is in danger of going under because of the newly announced loss.

Copyright 2012 ABC News Radio







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