'London Whale' Linked To Bank's £1.2bn Loss
A team of high-stakes traders, including one dubbed the London Whale, are at the centre of an investigation over £1.2bn losses at America's biggest bank.
The team at JPMorgan Chase had taken bets in financial markets that were designed to protect the bank by hedging against its other investments, but the strategy dramatically backfired, losing $2bn in the past six weeks.
The revelation hit banking shares across the world today and heightened calls for more regulation in the UK, where it is understood the majority of the traders are based.
JPMorgan Chase shares lost 9% as markets opened following the news overnight. Other bank stocks, including Citigroup, Bank of America and Barclays, also suffered losses.
The London Whale, who gained the nickname because of the size of his trades, has been widely reported to be French-born Bruno Iksil.
He is understood to be one of the best paid traders in the City and commutes to London from Paris on a weekly basis.
Insiders at JPMorgan stressed that he is not a rogue trader, but one of a team whose strategy went wrong.
The Times reported that the banker in charge of the unit responsible for the loss was paid $14m last year.
According to the newspaper, Ina Drew, who is in charge of the chief investment office department within JPMorgan, received a cash bonus of $4.7m, a share award of $7.1m, options worth $1.5m and a base salary of $750,000.
Ms Drew, 54, is Mr Iksil's boss.
The trading loss is an embarrassment for the bank that came through the 2008 financial crisis in much better health than its peers, steering clear of risky investments that hurt many other banks.
Chief executive Jamie Dimon said: "The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought.
"There were many errors, sloppiness and bad judgment."
It was reported in April that a single trader, known as the London Whale, was making such large trades that he was moving prices in the $10trn market.
Mr Dimon said the losses were "somewhat related" to that story, but seemed to suggest that the problem was broader.
He also said the company had "acted too defensively" and should have looked into the division more closely.