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saisriram
Topic Author
Posts: 3
Joined: July 14th, 2002, 3:00 am

JP Morgan- 2 billion trade loss

Can anyone help to understand what exactly happened, how it happened and how was it not detected earlier and how did it come into light ?

daveangel
Posts: 17031
Joined: October 20th, 2003, 4:05 pm

JP Morgan- 2 billion trade loss

you should ask Bruno Iksil... I am trying to locate the original thread that discussed his trades here.http://www.bbc.co.uk/news/business-18030022
knowledge comes, wisdom lingers

daveangel
Posts: 17031
Joined: October 20th, 2003, 4:05 pm

JP Morgan- 2 billion trade loss

actually I saw this excellent analysis on dealbreakerQuote 1. make huge trades that you can't unwind 2. lower your balls into a vise, tighten 3. have conference call
knowledge comes, wisdom lingers

hayes
Posts: 1181
Joined: July 18th, 2008, 11:24 am

JP Morgan- 2 billion trade loss

rmax
Posts: 6080
Joined: December 8th, 2005, 9:31 am

JP Morgan- 2 billion trade loss

It is interesting that a couple of weeks ago the "Whale" was being touted as being an issue. I thought at the time that it was impossible to say whether it was an issue or not, as it was notional contracts that they were quoting... However it seems that the people doing the reporting knew the real score....It begs the question: why was this raised 2 weeks ago in the press? It sounds very much as though the information was seeded prior to the official release. Or there was a leak, and that kicked somone at JP to find out what was going on.

hayes
Posts: 1181
Joined: July 18th, 2008, 11:24 am

JP Morgan- 2 billion trade loss

QuoteOriginally posted by: rmaxIt is interesting that a couple of weeks ago the "Whale" was being touted as being an issue. I thought at the time that it was impossible to say whether it was an issue or not, as it was notional contracts that they were quoting... However it seems that the people doing the reporting knew the real score....It begs the question: why was this raised 2 weeks ago in the press? It sounds very much as though the information was seeded prior to the official release. Or there was a leak, and that kicked somone at JP to find out what was going on.Interesting..... Google brought up this......and this.....

MattF
Posts: 925
Joined: March 14th, 2003, 7:15 pm

JP Morgan- 2 billion trade loss

Looks like Bruno Iksil would have a greater life-expectancy at a Japanese fish processing plant right now. Agree with rmax that it's not a coincidence.

hayes
Posts: 1181
Joined: July 18th, 2008, 11:24 am

JP Morgan- 2 billion trade loss

QuoteOriginally posted by: MattFLooks like Bruno Iksil would have a greater life-expectancy at a Japanese fish processing plant right now. Agree with rmax that it's not a coincidence.Not sure. It might be the case. I suppose it depends on how well organised you believe JPM senior management are. That kind of media management involves a lot of co-ordination and trust within an organisation where information travels freely.It could be just as likely that Bruno's world have known about it for a month, the whole floor knew about it by the end of the day and by the end of the evening the traders had told all their mates over half a dozen shandys.From that point on, it is not beyond the realms of impossibility that it took a few days to investigate, deliver the news up to senior management and then Jamie Dimon's office to launch an investigation, which I'm sure they'd have taken their time with, consulted legal advisors and maybe even pre-advised auditors. All legitimate stalling tactics that would allow the disseminated information to flow freely through finance blogs and maybe even the financial press. Basically, we should rename this the waiting for AlphaVille strategy
Last edited by hayes on May 10th, 2012, 10:00 pm, edited 1 time in total.

japanstar
Posts: 73
Joined: July 13th, 2009, 7:07 am

JP Morgan- 2 billion trade loss

QuoteOriginally posted by: rmaxIt begs the question: why was this raised 2 weeks ago in the press? It sounds very much as though the information was seeded prior to the official release. Or there was a leak, and that kicked somone at JP to find out what was going on.This is called "crisis management" and you have consultancy companies specialized on how to bring to the public "bad news" in a way which will hurt you the less. It is very much used (especially in the US) by companies, politicians etc... In this particular case they clearly released the "bad news" in two steps to limit the damages. cmEDIT: Typo
Last edited by japanstar on May 10th, 2012, 10:00 pm, edited 1 time in total.

hayes
Posts: 1181
Joined: July 18th, 2008, 11:24 am

JP Morgan- 2 billion trade loss

ExSan
Posts: 4554
Joined: April 12th, 2003, 10:40 am

JP Morgan- 2 billion trade loss

WSJ - J.P. Morgan's $2 Billion Blunder H - JPMorgan Chase Admits Big Losses On 'Egregious' Credit Trades WSJ - U.S. Stock Futures Hit by J.P. MorganBBC - JPMorgan reveals shock$2bn trading loss on investmentsDB - NYT - A Shock From JPMorgan Is New Fodder for Reformers

chocolatemoney
Posts: 322
Joined: October 8th, 2008, 6:50 am

JP Morgan- 2 billion trade loss

My impression is that it takes to long to pile up that amount of shit, given the limited liquidity of that market.What happened to the regulators when they took a look at JPM's balance sheet in the aftermath of Lehman?Sloppiness?.. or am I missing something?

rmax
Posts: 6080
Joined: December 8th, 2005, 9:31 am

JP Morgan- 2 billion trade loss

In this situations I am only ever reminded of Satyajit Das' Traders Guns and Money where if gives the equivalent Defcon conditions for a trading desk:DEFCON 5 Go to lunch. The noon bells have tolled "all is well".DEFCON 4 Business as usual. Normal indolence and lack of care continues.DEFCON 3 The smell test tells you that there is a problem. You ask a few questions being careful not to be told anything that you might regret in hindsight when seeking to avoid culpability.DEFCON 2 You learn that your traders have lost an unspecified amount of money from the various journalists who ring you for comment. You thank them for letting you know what is really going on.DEFCON 1 The bank is bankrupt. You're fired. You join the speaker circuit sharing your experiences with other risk luminaries such as Nick Lesson.Note this was written in 2007 so there are a few more on the speaker circuit nowadays. Perfect Storms
Last edited by rmax on May 10th, 2012, 10:00 pm, edited 1 time in total.

trackstar
Posts: 27426
Joined: August 28th, 2008, 1:53 pm

JP Morgan- 2 billion trade loss

The Beltway Spin:JPMorgan's Dimon: Firm suffered $2B trading loss after "egregious" failure - Washington Post May 11May 11 (Bloomberg) -- "JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the firm suffered a$2 billion trading loss after an "egregious" failure in a unit managing risks, jeopardizing Wall Street banks' efforts to loosen a federal ban on bets with their own money.The firm's chief investment office, run by Ina Drew, 55, took flawed positions on synthetic credit securities that remain volatile and may cost an additional $1 billion this quarter or next, Dimon told analysts yesterday. Losses mounted as JPMorgan tried to mitigate transactions designed to hedge credit exposure..."and echoing recent posts here:"...JPMorgan also changed how it calculates so-called value at risk, or VAR, a measure of how much the company estimates it could lose on securities on 95 percent of days. The company restated its VAR for the first quarter, previously disclosed at$67 million, at \$129 million. The bank used a new model for calculating its trading risk in the first quarter that Dimon said was "inadequate." It is reverting to the old model."More on the link.**Rmax: Here is your Perfect Storms - Das linkYou have a ":" at the end of the URL that needs to be deleted.
Last edited by trackstar on May 10th, 2012, 10:00 pm, edited 1 time in total.

rmax
Posts: 6080
Joined: December 8th, 2005, 9:31 am

JP Morgan- 2 billion trade loss

Much obliged and corrected!