2012 JPMorgan Chase trading loss: Difference between revisions

Article is in-process. Subject is emerging as detailed investigations take months to complete. Expect major edits and updates. Contents are tentative and preliminary. Presented here in organized bullet outline format only. See talk

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.^{[citation needed]} 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 were launched to investigate the firm's risk-management system and its internal controls.

In February 2012, hedge fund insiders such as Boaz Weinstein of Saba Capital Management^[1][2] 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.^[3][4] Early reports were denied and minimized by the firm in an attempt to minimize exposure.^[5] 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 quarter and recalculation of a loss of $1.4 billion for the first quarter. A spokesman for the firm projected total losses might be more than $7 billion.^[6] The disclosure, which resulted in headlines in the media, did not disclose the exact nature of the trading involved, which remained in progress as of May 16, 2012 as J.P. Morgan's losses mounted and other traders sought to profit or avoid losses resulting from J.P. Morgan's positions.^[7][8] As of June 28, 2012 JP Morgan's positions were continuing to produce losses which could total as much as 9 billion dollars under worst case scenarios.^[9] The trades are possibly related to CDX IG 9, a credit default swap index based on the default risk of major U.S. corporations^[10][11] that has been described as a "derivative of a derivative".^[12][13] On the company's emergency conference call, JPMorgan Chase CEO Jamie Dimon said the strategy was "flawed, complex, poorly reviewed, poorly executed, and poorly monitored".^[14] The episode is being investigated by the Federal Reserve, the SEC, and the FBI.^[15]

On February 2, 2012 at the Harbor Investment Conference, speaking to an audience of investors, Boaz Weinstein recommended buying the Markit CDX North America Investment Grade Series 9 10-Year Index, CDX IG 9.^[16] This was a derivative which Weinstein had noticed to be losing value in a manner and to a degree which seemed to diverge from market expectations. It turned out that JPMorgan was shorting the index by making huge trades.^{[17] [18]} JPMorgan's bet was that credit markets would strengthen; the index is based on 121 investment grade bonds issued by North American corporations.^[16] Investors who followed Weinstein's tip did poorly during the early months of 2012 as JPMorgan strongly supported its position. However by May after investors became concerned about the implications of the European financial crisis the situation reversed and JPMorgan suffered large losses. In addition to Weinstein's Saba Capital Management, Blue Mountain Capital, BlueCrest Capital, Lucidus Capital Partners, CQS, and III are hedge funds which are known to have benefited from taking the opposite position to JP Morgan.^[1] A separate unit of JPMorgan was also on the winning side.

The following is an overview of the trades that resulted in a multibillion-dollar loss.^[8]

• Put on in 2011
• Bearish on global eco
• Bet - Junk bonds will decline in value

• Multi-leg order (Dwarfing trade #1 in size)
• Put on 1Q2012
• Intention - reduce above bearish stance
• Bet - investment grade bonds will not default (IG9 index)

Trade #2- Leg #1

• Sell CDS protection out to 2017

Trade #2-Leg #2

• Buy CDS protection out through 2012

Trade #2 summary: Left 2012 neutral, 2013-2017 betting that investment grade bonds will not default.

If the economy improved

• Credit spread would likely narrow
• Junk would rise (loss on trade #1), but Quality would also rise (gain on trade #2)
• Bet on Quality dwarfed the prior bet on the Junk
• Neutral to win overall

But...if the economy deteriorated

• Credit spread would likely widen
• Junk would fall (yielding a medium gain on that trade #1)
• Quality would also fall (yielding a large loss on trade #2)
• Neutral to loss overall.

The $2B loss came from three positions which partially offset each other. It occurred when the worlds financial markets were in relative calm. Had quality spread curves twisted or worldwide economic distress been more pronounced the loss would have been much higher.

The Financial Times "Alphaville" analysis suggests that these positions were not volatile enough to account for the full losses reported.^[19] They suggest that other positions are likely involved as well.^[20]

Dodd-Frank established "Enhanced Prudential Standard" for banks with greater than $50 billion in assets. (DFA Section 165(h) - See section VI in http://www.gpo.gov/fdsys/pkg/FR-2012-01-05/html/2011-33364.htm)

• Must establish a board risk committee
• Can't be housed within another committee
• Must report directly to the board
• Requires a formal written charter approved by the full board of directors
• At least one member must be a risk expert
• Must receive and review regular reports from the Chief Risk Officer

• Issued by SEC, became effective as of February 2010 Overview here. For more detail see http://www.sec.gov/rules/final/2009/33-9089.pdf
• Requires additional disclosure (Item 407 of Regulation S-K) in proxy and information statements about the board’s role in the company’s risk management process
• Must disclose whether and why they have chosen to combine or separate the principal executive officer and board chair positions
• For for an overview how banks might operationalize the above Dodd-Frank/FRB/SEC requirement see: http://www.corpgov.deloitte.com/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/IreEng/Page%20Copy/Home/Risk%20Committee%20Resource%20Guide%20for%20Boards_Deloitte_010412.pdf

• Regulation S-K Item 305 http://taft.law.uc.edu/CCL/regS-K/SK305.html
• Were disclosures in 10-K and 10-Q adequate?

• Source: 17 CFR Parts 200 and 240 Alternative Net Capital Requirements for Broker-Dealers That Are Part of Consolidated Supervised Entities; Supervised Investment Bank Holding Companies; Final Rules http://www.sec.gov/rules/final/34-49830.pdf
• Amends Rule 15c3–1 2 (the ‘‘net capital rule’’) under the Securities Exchange Act of 1934 [selected quotes]
• This alternative method permits a broker-dealer to use mathematical models to calculate net capital requirements [VaR] for market and derivatives-related credit risk. A brokerdealer using the alternative method of computing net capital is subject to enhanced net capital, early warning, recordkeeping, reporting, and certain other requirements, and must implement and document an internal risk management system.
• The amendments should help the Commission to protect investors and maintain the integrity of the securities markets by improving oversight of broker-dealers and providing an incentive for broker-dealers to implement strong risk management practices.
• The qualitative requirements, listed in paragraph (e)(1) of proposed Appendix E, would have required that:
  • The VaR models used to calculate deductions for market and credit risk be the same models used to report market and credit risk to the firm’s senior management and be integrated into the internal risk management system of the firm;
  • the VaR models be reviewed by the firm periodically and annually by a registered public accounting firm, as that term is defined in the Sarbanes- Oxley Act of 2002; 52 and
  • for purposes of computing market risk, the multiplication factor be determined based on quarterly backtesting of the VaR models used to calculate market risk and by reference to Table 1 of Appendix E.
• Final rule http://taft.law.uc.edu/CCL/34ActRls/rule15c3-1e.html Appendix E to Rule 15c3-1 -- Deductions for Market and Credit Risk for Certain Brokers or Dealers
• The program is designed to reduce the likelihood that financial and operational weakness in the holding company will destabilize the broker or dealer, or the broader financial system. The focus of this supervision of the ultimate holding company is its financial and operational condition and its risk management controls and methodologies.
• A broker-dealer shall submit the following information to the Commission with its application:
  • A comprehensive description of the internal risk management control system of the broker or dealer and how that system satisfies the requirements set forth in Rule 15c3-4
  • A description of the mathematical models to be used to price positions and to compute deductions for market risk, including those portions of the deductions attributable to specific risk, if applicable, and deductions for credit risk;
  • a description of the creation, use, and maintenance of the mathematical models;
  • a description of the broker’s or dealer’s internal risk management controls over those models, including a description of each category of persons who may input data into the models;
  • if a mathematical model incorporates empirical correlations across risk categories, a description of the process for measuring correlations
  • a description of the backtesting procedures the broker or dealer will use to backtest the mathematical model used to calculate maximum potential exposure; a description of how each mathematical model satisfies the applicable qualitative and quantitative requirements set forth in paragraph (d) of this Appendix E; and a statement describing the extent to which each mathematical model used to compute deductions for market and credit risk will be used as part of the risk analyses and reports presented to senior management;
  • A description of how the broker or dealer will calculate current exposure;
  • Comply with the provisions of Rule 15c3-4 with respect to an internal risk management control system [see separate section - Internal Risk Management Control Systems for OTC Derivatives Dealers] for the affiliate group as though it were an OTC derivatives dealer with respect to all of its business activities, except that paragraphs (c)(5)(xiii), (c)(5)(xiv), (d)(8), and (d)(9) of Rule 15c3-4 shall not apply;
• To be approved, each VaR model must meet the following minimum qualitative and quantitative requirements:
  • The VaR model used to calculate market or credit risk for a position must be integrated into the daily internal risk management system of the broker or dealer;
  • The VaR model must be reviewed both periodically and annually. The periodic review may be conducted by the broker’s or dealer’s internal audit staff, but the annual review must be conducted by a registered public accounting firm, as that term is defined in section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.); and
  • On the last business day of each quarter, the broker or dealer must identify the number of backtesting exceptions of the VaR model, that is, the number of business days in the past 250 business days, or other period as may be appropriate for the first year of its use, for which the actual net trading loss, if any, exceeds the corresponding VaR measure

• Rule 15c3-4 http://taft.law.uc.edu/CCL/34ActRls/rule15c3-4.html [selected quotes]
• An OTC derivatives dealer shall establish, document, and maintain a system of internal risk management controls to assist it in managing the risks associated with its business activities, including market, credit, leverage, liquidity, legal, and operational risks.
• An OTC derivatives dealer shall consider the following when adopting its internal control system guidelines, policies, and procedures:
  • The sophistication and experience of relevant trading, risk management, and internal audit personnel;
  • The sophistication and functionality of information and reporting systems; and
  • The scope and frequency of monitoring, reporting, and auditing activities.
• An OTC derivatives dealer's internal risk management control system shall include the following elements:
  • A risk control unit that reports directly to senior management and is independent from business trading units;
  • Periodic reviews (which may be performed by internal audit staff) and annual reviews (which must be conducted by independent certified public accountants) of the OTC derivatives dealer's risk management systems;
• Written guidelines, approved by the OTC derivatives dealer's governing body, that include and discuss the following:
  • Quantitative guidelines for managing the OTC derivatives dealer's overall risk exposure;
  • The procedures for and the timing of the governing body's periodic review of the risk monitoring and risk management written guidelines, systems, and processes;
  • The process for monitoring risk independent of the business or trading units whose activities create the risks being monitored;
  • The performance of the risk management function by persons independent from or senior to the business or trading units whose activities create the risks;
  • The appropriate response by management when internal risk management guidelines have been exceeded;
  • The procedures authorizing specified employees to commit the OTC derivatives dealer to particular types of transactions;
• Management must periodically review, in accordance with written procedures, the OTC derivatives dealer's business activities for consistency with risk management guidelines including that:
  • Risks arising from the OTC derivatives dealer's OTC derivatives activities are consistent with prescribed guidelines;
  • Risk exposure guidelines for each business unit are appropriate for the business unit;
  • The data necessary to conduct the risk monitoring and risk management function as well as the valuation process over the OTC derivatives dealer's portfolio of products is accessible on a timely basis and information systems are available to capture, monitor, analyze, and report relevant data;
  • Procedures are in place to enable management to take action when internal risk management guidelines have been exceeded;
  • Procedures are in place to identify and address any deficiencies in the operating systems and to contain the extent of losses arising from unidentified deficiencies;
  • Procedures are in place to authorize specified employees to commit the OTC derivatives dealer to particular types of transactions, to specify any quantitative limits on such authority, and to provide for the oversight of their exercise of such authority;
  • Personnel resources with appropriate expertise are committed to implementing the risk monitoring and risk management systems and processes; and
  • Procedures are in place for the periodic internal and external review of the risk monitoring and risk management functions.

Section 252.126 Fed rule requires banks “have at least one member with risk management expertise that is commensurate with the company’s capital structure, risk profile, complexity, activities, size and other appropriate risk factors.” Further, the NPR defines risk management expertise as follows:

• An understanding of risk management principles and practices with respect to bhank holding companies or depository institutions
• Experience developing and applying risk management practices and procedures, measuring and identifying risks, and monitoring and testing risk controls with respect to banking organizations

Selected quotes. see: http://www.jpmorganchase.com/corporate/About-JPMC/risk-committee-charter.htm

• The Risk Policy Committee is responsible for oversight of the CEO's and senior management's responsibilities to assess and manage the corporation's credit risk, market risk, interest rate risk, investment risk, liquidity risk and reputational risk.
• review benchmarks for and major financial risk exposures from such risks.
• receive and review reports from management of the steps it has taken to monitor and control such exposures.
• review management's performance against these policies and benchmarks.
• approve and periodically review the corporation's Risk Appetite Policy, and review actual or forecast results exceeding risk appetite tolerances.

• source 2012 JPM Proxy Statement
• See also the section on key people: Board of Directors - Risk Policy Committee members
• The Firm’s risk management is described in the Management Discussion and Analysis of the 2011 Annual Report starting at page 125. As stated there, risk is an inherent part of JPMorgan Chase’s business activities and the Firm’s overall risk appetite is established in the context of the Firm’s capital, earnings power and diversified business model. The Firm’s risk management framework and governance structure are intended to provide comprehensive controls and ongoing management of the major risks taken in its business activities.

• source 2012 JPM Proxy Statement
• The Firm employs a formalized risk appetite framework to clearly link risk appetite and return targets, controls and capital management.
• The CEO is responsible for setting the overall risk appetite for the Firm, and the line of business (“LOB”) CEOs are responsible for setting the risk appetite for their respective LOBs subject to approval by the CEO and the Firm’s Chief Risk Officer.
• The Risk Policy Committee approves the risk appetite policy on behalf of the entire Board of Directors.

• source 2012 JPM Proxy Statement
• The Firm’s risk governance structure starts with each line of business being responsible for managing its own risks, with its own risk committee and a chief risk officer. Overlaying the line of business risk management are four corporate functions with risk management-related responsibilities.
• Risk Management operates independently to provide oversight of firmwide risk management and controls, and is headed by the Firm’s Chief Risk Officer, who is a member of the Firm’s Operating Committee and reports to the CEO and is accountable to the Board of Directors, primarily through the Board’s Risk Policy Committee.
• The Chief Investment Office and Corporate Treasury are responsible for managing the Firm’s liquidity, interest rate and foreign exchange risk, and other structural risks.
• Legal and Compliance has oversight for legal risk.
• Each LOB has a risk committee which includes in its mandate oversight of the reputational risks in its business.

• source 2012 JPM Proxy Statement
• The Board of Directors exercises its oversight of risk management’s principally through the Board’s Risk Policy Committee and Audit Committee.
• The Risk Policy Committee oversees senior management risk-related responsibilities, including reviewing management policies and performance against these policies and related benchmarks.
• The Audit Committee reviews with management the system of internal controls that is relied upon to provide reasonable assurance of compliance with the Firm’s operational risk management processes.
• The Compensation Committee is responsible for reviewing the Firm’s compensation practices and the relationship among risk, risk management and compensation in light of the Firm’s objectives.
• Each of the committees oversees reputation risk issues within its scope of responsibility.
• The Board of Directors also reviews selected risk topics directly as circumstances warrant.

JPMorgan Chase has launched its own internal investigation into the trading losses by involving its internal audit department, general counsel, and PricewaterhouseCoopers.^{[citation needed]}

• PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, New York 10017
• Fees paid to PricewaterhouseCoopers were $86.5 million in 2011
• Appendix E to SEC Rule 15c3-1 The VaR model must be reviewed both periodically and annually. The periodic review may be conducted by the broker’s or dealer’s internal audit staff, but the annual review must be conducted by a registered public accounting firm

• William McLucas
  • Law firm: Wilmer Cutler Pickering Hale & Dorr LLP
  • head of SEC's enforcement division from 1989 to 1998
  • http://www.wilmerhale.com/william_mclucas/

• Law Firm WilmerHale www.wilmerhale.com/
• reviewed London CIO trading unit
  • thousands of emails
  • tens of thousands of recorded conversations
  • interviewed some of the traders

• Law Firm Shearman & Sterling http://www.shearman.com/

Many points on Drew, Duersten, Macris & Tse referenced from - NY Times article^[21] More points on key people referenced from WSJ Article.^[22]

• [2012 proxy statement] provides oversight of the CEO’s and senior management’s responsibilities to assess and manage the Firm’s credit risk, market risk, interest rate risk, investment risk, liquidity risk, and reputational risk, and is also responsible for review of the Firm’s fiduciary and asset management activities.
• [2011 MD&A] The Board of Directors exercises its oversight of risk management, principally through the Board’s Risk Policy Committee and Audit Committee. The Risk Policy Committee oversees senior management risk-related responsibilities, including reviewing management policies and performance against these policies and related benchmarks.
• James S. Crown - chair http://www.nndb.com/people/963/000128579/
• Ellen V. Futter http://www.nndb.com/people/191/000124816/
• David M. Cote http://www.nndb.com/people/680/000125305
• 2010 - "Certain directors were briefed then on a foreign-exchange-options bet that went bad, and were told that the trader responsible wouldn't be allowed to go overboard in the future"^[22]

• [2012 proxy statement] provides oversight of the independent registered public accounting firm’s qualifications and independence; the performance of the internal audit function and that of the independent registered public accounting firm; and management’s responsibilities to assure that there is in place an effective system of controls reasonably designed to safeguard the assets and income of the Firm, assure the integrity of the Firm’s financial statements, assure compliance with the Firm’s operational risk management processes, and maintain compliance with the Firm’s ethical standards, policies, plans and procedures, and with laws and regulations. The Board of Directors has determined that Mr. Bell, Ms. Bowles and Mr. Jackson are audit committee financial experts as defined by the SEC.
• [2011 MD&A] The Audit Committee is responsible for oversight of guidelines and policies that govern the process by which risk assessment and management is undertaken. In addition, the Audit Committee reviews with management the system of internal controls that is relied upon to provide reasonable assurance of compliance with the Firm’s operational risk management processes.
• Laban P. Jackson, Jr. - chair
• William H. Gray, III
• James A. Bell
• Crandall C. Bowles
• meeting of audit committee just before the full board convened April 17, 2012 were informed "there was something wrong in the London office" and were told the matter "was being investigated."

• Chairman of the Board
• Chief Executive Officer
• Board Member, Federal Reserve Bank of NY
• Direct Quotes about the trades
  • "flawed, complex, poorly reviewed, poorly executed, and poorly monitored"
  • "flawed, complex, poorly conceived, poorly vetted and poorly executed...This should never have happened...I can't justify it. Unfortunately, these mistakes were self-inflicted...However, we also understand the need for rules and practices to ensure that hedging doesn't morph into something different. What this hedge morphed into violates our own principles."
• Jamie Dimon
• will testify to House Financal Services on June 19th
• Hearing entitled “Examining Bank Supervision and Risk Management in Light of JPMorgan Chase’s Trading Loss” set for Tuesday, June 19, 2012 10:00 AM
  • http://financialservices.house.gov/Calendar/?EventTypeID=309

• Former Chief Financial Officer,
• reported to Diamon

• Chief Financial Officer
• Chairman of Investment Committee and Member of Operating Committee, JPMorgan Chase & Co.

• Chief Risk Officer
• Reports to Diamon
• since January 2012
• Was Chief Risk Officer of the Investment Bank since 2006.
• [2011 MD&A] Risk Management operates independently of the lines of businesses to provide oversight of firmwide risk management and controls, and is viewed as a partner in achieving appropriate business objectives. Risk Management coordinates and communicates with each line of business through the line of business risk committees and chief risk officers to manage risk. The Risk Management function is headed by the Firm’s Chief Risk Officer, who is a member of the Firm’s Operating Committee and who reports to the Chief Executive Officer and is accountable to the Board of Directors, primarily through the Board’s Risk Policy Committee. The Chief Risk Officer is also a member of the line of business risk committees.

• Former J.P. Morgan's chief risk officer
• Reported to Diamon

• Chief Investment officer
• Head of risk management
• Resigned

Ina Drew was a high ranking executive on Wall Street. She was the Chief Investment Officer for J.P. Morgan and was forced to resign after the company suffered a trading loss of $2 billion in April/May 2012. She was one of very few high ranking female executives on Wall Street. "Until the loss was disclosed late Thursday [May 10, 2012], Drew was considered by some market participants as one of the best managers of balance-sheet risks. She earned more than $15 million in each of the last two years."^[23] Her reported compensation for 2011 was $14 million. In 1993, she was profiled as one of Crain's New York "40 under 40."^[24] She was CIO of JP Morgan Chase & Co. since February 2005. "Prior to that she was Head of Global Treasury [at JPM].^[25] She earned a master's degree in international economics from the School of International and Public Affairs at Columbia University.^[24]

• Was employed for 7 years
• solid performance of 2008 as other banks had huge loses
• solid performance 2009 and 2010
• had a steely resolve
• On AM calls would insist traders
  • defend their positions
  • outline the risks they would face that day
• solid track record during extremely difficult time led to strong trust by Dimon
• fourth-highest-paid officer
• moved from one floor above the trading desk, to senior executive section on 48th Fl
• became much more confident, perhaps overconfident.
• became much less less hands-on with the trading floor and the trading book
• 2010 diagnosed with Lyme disease and was frequently out
• Two trading units (NY and London) became decisive and uncontrolled
  • Making riskier bets
  • AM conference calls devolved to shouting matches
  • Each unit was trying to obtain more responsibility over the other
• Replaced by Matt Zames

• Treasurer
• Prior to this spot was CFO of the CIO for 11 years
• Reviewed weekly the positions being taken at CIO
• Raised general concerns about risks being taken by the London office^[26]
• Left abruptly for personal reasons October, 2011
• now works for Citigroup Inc.
• position open for 5 months
• Replaced by Sandie O'Connor 3/5/2012

• CIO's Chief Risk Officer
• Held position February 1 until May 14, the period of major loss
• resigned week of 7/13
• represented by a New York defense attorney
• Former CEO of debt capital markets Cantor Fitzgerald LP
• had no experience as a risk manager
• Brother-in-law, Barry Zubrow, the bank's chief risk officer until early January 2012
• recently replaced by Chetan Bhargiri
• Reportedly Cantor Fitzgerald was fined $250k when he day-traded the same securities in both his personal and proprietary equities trading accounts. Hearing Board Decision: 10-ARCA-01 http://www.nyse.com/DiscAxn/discAxn_05_2010.html

• Former CIO's Chief Risk Officer
• had begun a review last summer [2011] of the CIO's risk limits and participated in a discussion about whether restrictions needed to be tighter and more specific
• told Ms. Drew that the CIO needed to free up its credit-risk officers to focus on their jobs, not other tasks.

• London
• Greek national
• joined in 2006, charged with overseeing the London office.
• perceived to be a skilled trader but sometimes headstrong.
• At Bankers Trust, where he was a currency trader in the 1990s, he was asked to resign because of concerns that he wouldn't get along with a new boss, said two people familiar with the events
• Later at Dresdner Kleinwort Wasserstein, where he supervised proprietary traders, he left after losing a three-way battle for sole leadership of capital markets
• spearheaded the strategy behind the losing bet
• No one could really challenge his traders
• gained more latitude to build and expanded trades from London
• Size of his bets continued to grow
• trades growing more complex, making them harder to exit when market conditions turned against the bank in 2012.
• No one could sufficiently push back him, so he and Bruno could do what they wanted

• New York
• Head of the North American trading desk
• raised objections to Mr. Macris’s outsize bets
• was routinely shouted down by Mr. Macris during conference calls between London and New York
• had been at JPMorgan for over 16 year

• Hired by JPM in 2011
• formerly with Duquesne Capital Management a hedge fund
• took over for Ms. Duersten as head of the North American trading desk.
• less equipped to battle Macris as a newcomer
• At one point, Ms. Duersten called one trader into her office at the New York headquarters and told him that he would report to her, instead of to Mr. Macris, the trader said. “Achilles hit the roof” upon hearing of the meeting, the trader said, adding that he “didn’t know who to listen to.”

• London
• Reported to Macris, worked at Dresdner with him
• Head of credit trading
• Spaniard
• Former Managing director and trader
• No longer with the firm
• Represented by attorney

• Credit derivatives trader
• “Everyone knows The Whale, whenever there was a big move in CDS markets, you knew it was the Whale”^[27]
• a/k/a "The Caveman" "for pursuing trades that rivals sometimes thought were overly aggressive but often led to huge profits"^[28]
• No longer with the firm
• Represented by attorney Ray Silverstein http://www.legal500.com/firms/490-browne-jacobson-llp/offices/7519-london/lawyers/43750

Bruno Iksil, nicknamed the London Whale^[29] (for his risky trades^[30]) and Voldemort (for his supposed power on Wall Street)^[30] is a French-born trader for the London office of JPMorgan Chase^[30] who is held responsible for a $2 billion loss.^[31] Reportedly he began working for JPMorgan in 2005 and lives in Paris, commuting to the City.^[31] A private man, no photographs of him are said to exist.^[32] Iksil was so powerful and so bullish in early 2012^[33] that his trades alone moved the index, according to New York magazine.^[31] After "the disastrous $2 billion trading loss related to derivatives in the bank's chief investment office in London" became known in May 2012, he was "stripped of his trading responsibilities."^[34][35]

The trades occurred within the Chief Investment Office (CIO), where staff were reportedly "faithfully executing strategies demanded by the bank's risk management model". This unit is reported to have very wild latitude in otherwise unsupervised trading. The company had been without a treasurer for five months during the time of the trades and had a relatively inexperienced executive in charge of risk management in the CIO.^[36]

[holding spot for the risk management - including "the model", the staff, the procedures, how the loss accumulated yet escaped attention until hitting the multibillion-dollar range.]

May 10 Per Reuters^[37]

• Dimon announced loss of at least $2 billion through "egregious mistakes" in trading
• Announced JPM's value-at-risk (VaR) model was changed
  • old model $129 million or more in a day during the first quarter an amount higher than during the 2008 crisis
  • new model $67 million
• bank had tried the new model, and then reverted to the old one, which it had used for several years.
• Banks sometimes refine their value-at-risk, or VaR, models but those commonplace changes do not by themselves produce such dramatically different results, said Christopher Finger, one of the founders of RiskMetrics Group, which pioneered VaR models and is now a unit of MSCI Inc.
• Risk controls on traders in the CIO were eased last year without Dimon knowing, the Wall Street Journal reported on Friday, citing unidentified sources.

• Internal Control System / Risk Management System
  • Design
  • Technical flaws
  • Compliance or circumvention by individuals and small groups

• CFO Braunstein April 13, 2012 -- “We are very comfortable with our positions as they are held today, and I would add that all of those positions are fully transparent to the regulators”

• The JPMorgan Whale's Disastrous Trades Were No Hedges - The bank may now be calling the positions an "economic hedge" but, in hindsight, they look to me like a series of trades designed to generate income that spiraled out of control on incorrect or ignored risk information and lack of control over traders.^[38]

• FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities
  • derivative must be highly effective at offsetting the risks being hedged
  • must designate and document the hedge relationship
  • not done here
• Accountants in FASB 133 attempt to define what exactly is hedging. The distinction that and speculating are far from bright line, crystal clear. The distinction is almost as difficult as the division between prudent investing and mere gambling. There exists lack of uniform agreement on hedging vs. speculating across various informed sources including: FASB, SEC, FRB, OCC, FDIC etc. For example, note that the SEC asked the FASB to review accounting for hedging derivatives when counterparties change^[39] See also Volcker Rule

• 8-K reports to the SEC must be filed for any of the following (only selected events listed here, many more events must be disclosed)
  • Director departs (if due to any disagreement must disclose the discord)
  • Result of operations and financial condition
  • Material impairments
  • SEC investigations and internal reviews
  • Changes in executive management, officer leaves, is hired, or fired
  • Amendments to company Governance Policies
    • Code of Ethics
    • Board Committee Governance Policies
  • Change in credit
  • Other material events
• To search 8-K for JPM http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000019617&type=8-K&dateb=&owner=exclude&count=40

Company issues press releases here http://investor.shareholder.com/jpmorganchase/releases.cfm

• May 14, 2012 Press Release
  • Matt Zames succeed Ina Drew as Chief Investment Officer. Ina Drew retired.
  • Mike Cavanagh, CEO Treasury & Securities Services will coordinate the firmwide response to the recent losses...largely dedicated to this project for the near future. Previously CFO the firm. This group will have about 24 members spanning the following functions:
    • technology
    • risk management
    • accounting functions

Find webcast calls, replays and materials here http://investor.shareholder.com/jpmorganchase/presentations.cfm

• 2Q2012
  • 2Q2012 financial results and an update on CIO
  • July 13, 2012
  • Materials released at 7:00a.m. Call and Q&A at 7:30a.m. - 9:30 (Eastern)
  • web access or dial in 10 minutes prior to the start
    • (866) 541-2724 or (877) 368-8360 in the U.S. and Canada
    • (706) 634-7246 for international callers.
  • replay starting around noon Conference ID 87040825
  • (855) 859-2056 or (800) 585-8367 (U.S. and Canada)
  • (404) 537-3406 (International)

The Volcker Rule, part of the Dodd–Frank Wall Street Reform and Consumer Protection Act, bans high-risk trading inside commercial banking and lending institutions. The rule goes into effect on July 21, 2012.

• Sponsored by two senators
  • Jeff Merkley D-OR
  • Carl Levin D-MI
• The Volcker rule is sometimes refereed to as a modern Glass-Steagall firewall that separates core banking system from higher-risk, hedge fund-style proprietary trading.
• Levin and Merkely wrote on May 17, 2012 a letter to FRB, SEC, OCC, CFTC and FDIC regulators to insist that law as enacted be implemented into detailed regulations. It specifically references these trading losses as prop trading. http://levin.senate.gov/download/?id=bbfdcd6b-e848-45d2-903e-602bfde6edd9

Numerous investigations have been announced and are in process.^[40]

• Tim Johnson (D-SD) Chairman
• Richard Shelby (R-AL) Ranking Member
• Has held three hearings
• http://banking.senate.gov/public/
• http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Home
• http://banking.senate.gov/public/index.cfm?FuseAction=Newsroom.PressReleases
• Testimony in front of Senate June 13 did not reveal much about the actual trading losses, people involved, timing, systems in place, size of positions taken, etc. Washington Post provided a very good overview of some of the politics Jamie Dimon: From Wall Street’s whipping boy to the GOP’s golden boy^[41]
• Who audits central banks? (EG The NY Fed, that Diamon is a board member of) "That duty falls to the US Congress"

• Spencer Bachus (R-AL) Chairman
• Barney Frank (D-MA) Ranking Member
• "The Financial Services Committee will hold a hearing on the public policy implications of this trading loss, but we will not rush into a hearing simply to chase headlines. This will give the committee and the regulators time to gather all the facts, do our homework and then have a serious hearing on this subject."
• Hearing entitled “Examining Bank Supervision and Risk Management in Light of JPMorgan Chase’s Trading Loss” was held June 19, 2012 10:00 AM
  • Thomas Curry, Comptroller of the Currency, OCC
  • Mary Schapiro, Chairman, SEC
  • Gary Gensler, Chairman, CFTC
  • Martin Gruenberg, FDIC
  • Scott Alvarez, General Counsel, FED
  • Panel II Jamie Dimon, Chairman and CEO, JPM
• http://financialservices.house.gov/
• http://financialservices.house.gov/Calendar/?EventTypeID=309

The June 19 hearing, as it relates to regulatory shortcomings, is best summed up by this testimony

Stevan Pearce (R-NM) - Mr Alvarez [FED] if we look at derivative trading and especially overseas derivative trading, and we are going to prioritize the risks that these major firms face, would that particular activity be in the middle or at the top? Is that a scary, risky thing, or is it kind of not very risky? What priority should we be looking at when we consider derivatives trades?

Scott Alvarez (FED) - So, I’m not sure what priority congress wants to assign, but regulators….

Pearce (R-NM) - No, no! I am saying you are in charge! We [congress] simply oversee! You are in charge of risk. That is what you say. [referring to the FED written testimony].

Alvarez (FED) – So, I think from our prospective, we are taking two high priority approaches. One is we think its important for firms to have good risk management around….

Pearce (R-NM) - No, my question is not that, my question is, derivative trading itself, is it very high risk?

Alvarez (FED) - It can be if it…

Pearce (R-NM) - O.K. so it can be that’s all I’m trying to establish.

[Brief exchange between Pearce and committee chair Bachus omitted.]

What I’m going to go to next is, you guys are the supervisors in charge, that’s the consolidated supervisory charge of all the people who are regulating the activities. And so I see Mr. Curry says he has people, 65 people on location. These are not regular people. These are people with 20 or more years of experience, skills in key risk areas, teams of PhD economists. He then identifies in the next paragraph - the examination teams have three objectives, one of which is the key risks.

Derivatives would be a key risk; they are very, very problematic. So, my question is with these 65 regulators on site, would you know the name of the one who monitors trading of derivatives? You are the guy in charge, you! The Federal Reserve. You say so in your testimony

Alvarez (FED) - No we are not the one in charge of the OCC. We are the consolidated supervisor. We supervise the unregulated portions of the holding company and its roll up of its consolidated activities but the specific activities in the national bank, those 65 examiners you are talking about I’m afraid …

Pearce (R-NM) - Mr. Curry [OCC] would you have the name of whoever is in charge of the derivatives?

Thomas Curry (OCC) - We operate the supervision policy where we have a resident examiner in charge of the institution. That individual will allocates responsibility for individuals to examine into particular areas of the bank. That can change over time. It can also be also be the result of someone being brought in extra….

Pearce (R-NM) - Do you have a name of who was in charge, at the time you were discussing earlier, during that time of early April?

[Background – On April 6 major news (Bloomberg) broke revealing that JPM had taken extremely large risks in the derivatives market. All regulators via testimony this day stated they became aware of the extremely large derivatives portfolio held by JPM as of that date. Earnings were officially released on April 13. At a conference call that day with shareholders and investment analysts, open to the public, Dimon downplayed any risk involved. The CFO assured all on the call that all positions and transactions were fully transparent to regulators.]

Curry (OCC) - Not at the moment, who was in charge of looking at the derivatives portfolio.

Pearce (R-NM) - Mr. Chairman, my point is, we’ve got 65 gee-whiz people. I mean these are top-notch people according to your testimony. We have this stuff going on! They’re on the site in order to pay attention, and yet I hear from Mr. Alvarez that we are concerned with the changes in the portfolio, during that period of time. What are they doing? Are they sitting here watching? That’s what they were supposed to be doing!

The SEC and CFTC, were sitting there with MF Global, while they were taking money out of customer accounts! They weren’t watching! They weren’t saying a word! They weren’t raising an alarm!

And here y’all are saying that you are starting an investigation. I thought that’s the reason you have people on location – in order to watch what is going on! You have 65 people. You say in your testimony that key risks are what you’re monitoring, and yet Mr. Alvarez finds out ooh! You all didn’t call him and tell him! He is alarmed with the changes!

I’m just thinking, what are we doing here? Why do you have these people on location? Mr. Gruenberg, he at least admits, they at least they were finally worried “we are seeing recent losses”. That’s revealing. That’s bringing. It reveals certain risk. I mean, the entire nation is aware of risks, [vial news stories.] I’m just sitting here saying you know, what are we doing? You are supposed to be regulating. We are all supposed to be out there. You have got on-site teams! And now we are starting an investigation? The investigation should be that you are talking to your people who were on location and finding out if they are doing their job or sitting there with their feet on the desk drinking coffee. From this side of the table we ask you all to do this and yet I come here and read all this testimony and it’s all, just kind of just angling towards the same thing. Nobody is really in charge. Nobody is really supervising. We are finding out after the fact, through press releases, or whatever. Thing gets very frustrating from our point of view.

Curry (OCC) - I understand Congressman that’s part of our review process is to do a post mortem to see what went wrong in this particular case, and how the OCC can better perform its duties

• Justice Department opened an inquiry
• Federal investigators will focus on possible legal violations
• FBI NY field office will lead * http://www.fbi.gov/newyork/

• Ben Bernake, Chairman
• Lee C. Bollinger Chairman FRB NY
• Sarah J. Dahlgren, Executive Vice President FRB NY - Financial Institution Supervision http://www.newyorkfed.org/aboutthefed/org_banksup.html
• The Division of Banking Supervision and Regulation is responsible for the oversight of U.S. banking holding companies, foreign banking organizations operating in the U.S., and state-chartered member banks of the Federal Reserve System. The Division develops and implements safety and soundness and other regulations for these entities under Board direction and in collaboration with Reserve Banks and other domestic and international regulatory authorities
• Federal Reserve / JPM Connection
• Dimon sits on the board of the FRB NY
• The Treasury Secretary of the United States (himself a former Chairman of the NY Fed) stated that Fed bank board members have zero role in:^[42]
  • Writing of the rules
  • Supervision
  • Decisions about how to respond to the financial crisis
• The Treasury Secretary is a former Chairman of the FRB NY
• Dimon was thought to be a candidate to become Chairman of the FRB NY
• The FRB NY Chairman is the second most powerful position in the Federal Reserve under the general Chairman. They operate as "second in command" at the Federal Open Market Committee FOMC in setting interest rates in the U.S. FRB NY implements the decisions of the FOMC in the actual marketplace on a daily basis.
• GAO Report on manage conflicts of interest involving Reserve Bank directors
  • Federal Reserve Bank Governance - Opportunities Exist to Broaden Director Recruitment Efforts and Increase Transparency http://www.gao.gov/products/GAO-12-18
  • take additional steps to strengthen controls designed to manage conflicts of interest involving Reserve Bank directors
  • make key governance documents, such as such as board of director bylaws, committee charters and membership, and Federal Reserve Board director eligibility policy and ethics policy, available on their websites or otherwise easily accessible to the public.
  • help enhance economic and demographic diversity and broaden perspectives among Reserve Bank directors who are elected to represent the public...

• Tim Geithner, Secretary of the Treasury
• http://www.treasury.gov
• Will testify to Senate Banking on June 6
• http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Home

FSOC

• Will the Financial Stability Oversight Council (FSOC) study and report on this event?
• JPM is clearly systemically important financial institution
• The loss was quite significant and very unexpected
• The prime regulator was the FRB of NY, Jamie Dimon was on both boards.
• http://www.treasury.gov/initiatives/fsoc/Pages/studies-and-reports.aspx

OFR

• Will the Office of Financial Research (OFR) look into this event?
• http://www.treasury.gov/initiatives/wsr/ofr/Pages/research.aspx

• Mary Shapiro, Chairman

Senate Banking May 22, 2012 [1]

• Proxy Disclosure Enhancements (Established by SEC within past couple of years.)
• Quantitative and Qualitative Disclosures about Market Risk
• Net Capital Rule
• Rule Internal Risk Management Control Systems for OTC Derivatives Dealers
• Value At Risk (VaR) specifics
  • must disclose material limitations...what the VaR model is not telling about the risks
  • changes to the VaR model and its characteristics must be publicly disclosed
  • VaR is used in the marked risk deduction from net capital. If they have large losses we make them back test and tell us why their estimates of risk were so far off. [see above transcript at roughly minute 91 and above here: Net Capital Rule and Internal Risk Management Control Systems for OTC Derivatives Dealers]

House Financial Services June 19, 2012 [2]

• S-K Item 303 (17 CFR 229.303.) Management’s Discussion and Analysis of Financial Condition and Results of Operations [3]
  • requires a discussion of known trends, events, demands, commitments, and uncertainties that are reasonably likely to have a material effect on financial condition or operating performance...This disclosure should highlight issues that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating performance or of future financial condition. This provision would mandate disclosure, for example, if a company was experiencing trading losses that are different from past experience, and, as a result, its current year results are likely to be materially adversely impacted compared
• S-K Item 305 (17 CFR 229.305) Quantitative and qualitative disclosures about market risk[4]
  • Disclosure is required on an annual basis about market risk as of the end of the company’s fiscal year...calls for qualitative disclosure about the company’s primary market risk exposures and how the company manages such market risks...Like the quantitative disclosure, this disclosure is required annually, with material changes reported quarterly.
• S-K Item 402(s) (17 CFR 229.402(s)) Executive Compensation [5]
  • This is a very new SEC item. JPM will likely be a test case as the regulation here is weakly formed. ^[43]
  • To the extent that risks arising from the registrant's compensation policies and practices for its employees are reasonably likely to have a material adverse effect on the registrant, discuss the registrant's policies and practices of compensating its employees, including non-executive officers, as they relate to risk management practices and risk-taking incentives...(more at [6])
  • the term reasonably likely was lobbied in. Research indicates that no firms have actually made this disclosure.
  • Quoting from [7] The general standard of materiality, set forth in TSC Industries, Inc. v. Northway, Inc.,68 is whether there is a “substantial likelihood that the disclosure of [an] omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” Further, in Basic Inc. v. Levinson,70 the Supreme Court adopted the TSC Industries standard of materiality for the anti-fraud context,71 and applied a “probability/magnitude” balancing approach to determine materiality in the case of contingent or speculative information or events.72
    • 68 426 U.S. 438 (1976).
    • 69 Id. at 449 (holding that “[a]n omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote”); see also SEC Staff Accounting Bulletin No. 99, 64 Fed. Reg. 45150 (Aug. 19, 1999) (stating that misstatements that have the effect of increasing management’s compensation may well render material a relatively small misstatement of a financial item).
    • 70 485 U.S. 224 (1988).
    • 71 Id. at 232.
    • 72 Id. at 238–39 (quoting SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 849 (2nd Cir.1968)) (holding that where information or events are speculative, such as in the merger negotiation context, materiality “‘will depend at any given time upon a balancing of both the indicated probability that the event will occur and the anticipated magnitude of the event in light of the totality of the company activity’”).
  • If the SEC doesn't prevail in the JPM case S-K Item 402(s) will likely need to be revised to have any effect.
• S-K Item 503(c) (17 CFR 229.503(c)) Risk Factors Disclosure Requirement [8]
  • requires companies to describe the material risks they face and how particular risks affect the company
  • the test here will be knew, or should have known, about a material risk, and then failed to disclose
• Exchange Act 1934 - Rule 12b-20 (17 CFR 240.12b-20) Additional Information [9]
  • This is a catch all requirement likely to be applied to the tempest in a teapot and other comments made during the Q1 earnings conference call.
  • In addition to the information expressly required to be included in a statement or report, there shall be added such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made not misleading.
• Regulation 14A Solicitation of Proxies (17 CFR 240.14a)
  • This area was discussed prior by the SEC in the prior Senate Hearing. See above on Risk Management disclosures in the Proxy statement, Risk Committee of the Board of Directors, and Executive Compensation 17 CFR 229.402(s).
• GAAP FASB 133, 161 (FASB ASC 815-10-50) Derivatives and Hedging GAAP
  • Generally accepted account principles for derivatives and hedging will be examined in depth. The financial statements notes and disclosures in this area have highly specific requirements, as determined by the Financial Accounting Standards Board. JPMs annual financial statement was audited by outside CPAs. After an extensive and expensive audit those CPAs opined that the financial statement was in conformance with GAAP. This means that they too will share some responsibility for any departures from GAAP should have been caught during the audit.

• Gary Gensler, Chairman
• testified to Senate Banking on May 22
• http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.LiveStream&Hearing_id=0ca41adf-ec74-4742-afa0-09bda7df05ca
• CFTC rules on Price Manipulation
  • Rule 180.1 modeled after Section 10(b) and Rule 10b-5 SEC Act 1934 - broadly prohibits fraud and fraud-based manipulation.
  • Rule 180.2 codifies Section 6(c)(3) of the Commodity Exchange Act- unlawful for any person directly or indirectly to manipulate or attempt to manipulate the price of any swap or commodity in interstate commerce.
  • According to the Wall Street Journal, CFTC subpoenaing internal bank emails to determine if JPMorgan officials made deceptive statements to manipulate price

• Administrator of National Banks
• Thomas Curry, Comptroller
• Ensures the safety and soundness of the national banking system
• The agency responsible for investigating and prosecuting acts of misconduct committed by institution-affiliated parties of national banks, including officers, directors, employees, agents and independent contractors (including appraisers, attorneys and accountants)
• The OCC participates in interagency activities in order to maintain the sanctity of the national banking system. By monitoring capital, asset quality, management, earnings, liquidity, sensitivity to market risk, information technology, consumer compliance, and community reinvestment, the OCC is able to determine whether or not the bank is operating safely and soundly, and meeting all regulatory requirements
• Will testify to Senate Banking on June 6
• http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Home
• The Office of the Comptroller of the Currency and the Federal Reserve already have legions of staff posted permanently in the nation’s largest banks with authority to halt any practice they deem “unsafe and unsound”. If the supervisors didn’t react to JPMorgan’s whale, there is little reason to believe that giving the same people more rules to enforce would help. from Richard Breeden, SEC chairman from 1989 to 1993

http://www.ft.com/intl/cms/s/0/9b8b53d4-aa6e-11e1-899d-00144feabdc0.html

• Martin Gruenberg, Acting Chairman
• ·Ensures the safety and soundness of the national banking system
• Is the agency responsible for investigating and prosecuting acts of misconduct committed by institution-affiliated parties of national banks, including officers, directors, employees, agents and independent contractors (including appraisers, attorneys and accountants)
• The OCC participates in interagency activities in order to maintain the sanctity of the national banking system. By monitoring capital, asset quality, management, earnings, liquidity, sensitivity to market risk, information technology, consumer compliance, and community reinvestment, the OCC is able to determine whether or not the bank is operating safely and soundly, and meeting all regulatory requirements.
• http://www.occ.treas.gov/about/who-we-are/district-and-field-offices/northeastern-district-info.html
• Will testify to Senate Banking on June 6
• http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Home

• Conduct rule-making, supervision, and enforcement for Federal consumer financial protection laws
• Restrict unfair, deceptive, or abusive acts or practice
• Monitor financial markets for new risks to consumers
• http://www.consumerfinance.gov/
• Will testify to Senate Banking on June 6
• http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Home

• House Agriculture Committee (swaps) - Frank Lucas

Bloomberg News, Robert Schmidt identified several people at JPM involved the lobbying and government relations response ^[44]

• oversees government relations globally
• former Clinton administration official
• (not using too many outsiders) “We wanted to take ownership of this and use our own people”

• former Republican senator
• regional chairman for the bank
• called up from FL

• former Fannie Mae lobbyist
• called in from JPMorgan’s London office

• former senior staff member, Senate Banking Committee Chairman Tim Johnson
• head of JPMorgan’s Washington office

• Hired by JPM
• run by ex-Utah Republican Senator Robert F. Bennett.
• Bennett is still barred from lobbying
• http://bennettdc.com/?page_id=860
• Partner P. Michael Nielsen will work directly on behalf of JPM
  • former senior policy adviser on the Senate Banking Committee
  • Republican
  • Helping draft formal responses to lawmaker queries

• JPM Chief of government relations.
• Former House R-NY 1993-2000
• Former member House Financial Services Committee
• http://www.joneswalker.com/professionals-561.html

• JPM internal lobbyist
• formerly a legislative director for Brad Miller (D-NC) member House Financial Services Committee

• former staffer House Financial Services Committee
• http://www.linkedin.com/pub/collins-lionel/28/111/2a0
• http://www.joneswalker.com/practices-102.html

• former staffer formerly to Gary L. Ackerman, D-N.Y. member House Financial Services Committee
• http://www.klgates.com/nicholas-a-leibham/

• Former D-TN in 1980s, a member House Financial Services Committee
• http://www.klgates.com/barton-j-gordon/

• Lobby Firms 2011 fees paid
  • $350k McBee Strategic Consulting
  • $250k K&L Gates
  • $240k Fierce, Isakowitz & Blalock
  • $130k Glover Park Group
  • $90k Monument Policy Group
  • $90k Walter Group
  • $80k Capitol Tax Partners
  • $80k Jones, Walker
  • $80k Lawrence J Romans
  • $80k LTD Group
• Political Contributions
  • Senate Banking Committee member campaign funds: $206,650
  • House Financial Services Committee member campaign funds: $168,055
  • more detail available. See: http://www.opensecrets.org/orgs/congcmtes.php?id=D000000103&cycle=2012

• Class Period - purchasers JPM stock between 5/13/2012 and 6/11/2012
• Complaint: http://www.rgrdlaw.com/media/cases/150_Complaint.pdf
  • Form 10-Q for the quarter ended 3/31/2012
  • Conference call with analysts May 10, 2012 after market closed

• Rogue trader
• List of trading losses
• Proprietary trading
• Volcker Rule
• Glass–Steagall Act
• Speculation
• Swap (finance)