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.

Another risk officer in JPMorgan ‘Whale’ trade retains lawyer

NEW YORK, Tue Aug 21, 2012 – Another JPMorgan Chase & Co. risk manager, who worked for a division that lost at least $5.8 billion on a series of complex derivatives trades, has hired a lawyer in connection with probes into the so-called “London Whale” trading debacle, according to sources familiar with the investigations.

Federal authorities are investigating an allegation that some of the bank’s traders in London may have tried to hide hefty losses, and JPMorgan is conducting an internal probe.

Peter Weiland, who was head of risk at JPMorgan’s CIO from late 2008 until the beginning of 2012, is one of at least six people associated with the case who have hired attorneys. He has been reassigned by the bank to a new risk control team at the overhauled Chief Investment Office where the loss occurred.

Weiland, who is based in New York, did not return requests for comment, and his lawyer declined to comment.

Of the six people who have hired attorneys, all but Weiland have either been fired by the bank or left on their own accord.

It is not clear how much interest federal authorities have in Weiland over an incident that has proved to be a major embarrassment for JPMorgan CEO Jamie Dimon. There is no indication that authorities believe Weiland has done anything wrong.

It is not unusual for traders to retain counsel in such high-profile probes, in part to shield themselves when critical discussions occur about possible criminal or civil wrongdoing.