Senate committee launches probe of JPM’s ‘Whale’ losses

NEW YORK, Fri Sep 7, 2012 – A U.S. Senate committee has launched a probe into JPMorgan Chase’s “London Whale” trading losses, according to a source familiar with the investigation.

The Permanent Subcommittee on Investigations, chaired by Senator Carl Levin, is interviewing current and former employees of JPMorgan’s Chief Investment Office in connection with the bank’s $5.8 billion loss on trades in an obscure corner of the credit market, according to the source.

A spokeswoman for the committee declined to comment.

JPMorgan’s losses stemmed from bets by London-based CIO trader Bruno Iksil on an index for credit default swaps. His outsized positions earned him the nickname “London Whale” from the hedge fund traders taking the other sides of his positions.

An internal investigation by the bank revealed the possibility that the trades may have been deliberately mismarked in JPMorgan’s books to make the losses look smaller.

On Thursday, JPMorgan named Craig Delany as the new head of the chief investment office, filling a role that had been vacant for over three months after his predecessor, Ina Drew, and other executives and traders from the CIO resigned.

Federal investigators and the Securities and Exchange Commission are looking into whether anyone involved in the incident committed a crime.

So far, seven current and former JPMorgan employees have hired lawyers to help them navigate the investigations. The bank’s internal probe is ongoing.

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