Whale of a Trade Revealed at Biggest U.S. Bank With Best Control

From Bloomberg
By Dawn Kopecki & Michael J. Moore
June 3, 2013

“We are dead I tell you,” Bruno Iksil, a London-based trader at JPMorgan Chase & Co. (JPM), messaged an associate on March 23, 2012. “It is hopeless now.”

Iksil, a Frenchman who would soon become known as the London Whale because of the size of his trades, had lost $44 million on corporate-credit bets three days earlier and was down more than $500 million for the year, Bloomberg Markets will report in its July issue. He and junior trader Julien Grout, under pressure from their manager, had tried to hide the extent of losses that would swell to more than $6.2 billion, the bank’s biggest trading blunder ever.

Willful Intent

The SEC probably would have a hard time making a case against Dimon because it would need to show he willfully intended to mislead investors, according to Coffee, the Columbia law professor.

“There were clear misstatements made, with the only question being whether New York-based officials were misled by people in London, who pulled the wool over their eyes,” Coffee says. “The CFO described the trades as part of a hedging policy, but this was wrong by 180 degrees.”

Statements made with knowledge that they are false are treated more harshly by regulators than those that turn out to be untrue, according to Tamar Frankel, a professor at the Boston University School of Law.

Read the full article at Bloomberg.com.