Woman blamed for JPMorgan losses to testify

March 15, 2013 at 3:00 AM
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WASHINGTON, March 15 (UPI) -- JPMorgan Chase denied it misled U.S. regulators and clients about huge trade losses, as the woman who oversaw the trades was to appear before the Senate Friday.

"While we have repeatedly acknowledged significant mistakes, our senior management acted in good faith and never had any intent to mislead anyone," the nation's biggest bank by assets said in a statement after a scathing Senate report said the multinational banking giant ignored internal warnings and manipulated documents as a little-known trading division lost $6.2 billion.

JPMorgan Chief Executive Officer Jamie Dimon briefly withheld reports from regulators, saying "it was too much information to provide," the 301-page report by the Senate Permanent Subcommittee on Investigations said.

The subcommittee planned at 9:30 a.m. to question JPMorgan executives and regulators, including Ina Drew, 56, who resigned as head of the Chief Investment Office.

She was saddled with much of the blame for what went wrong with the trades.

Drew's testimony as the leadoff witness would be the first time she has talked publicly about the trading mistakes.

The panel's report painted her as earlier balking at regulator demands, notably by the Office of the Comptroller of the Currency, for more information about the perilous trades, calling the demands "unnecessary and intrusive," the subcommittee said in its report.

The Chief Investment Office was a little-known profit center that made many winning trades through the financial crisis and into 2011, The Wall Street Journal said.

But then a group of traders in its London office -- including Bruno Iksil, who became known as the London Whale because of the outsize trades, the Caveman for his trading aggressiveness and Voldemort for his supposed power on Wall Street -- created complicated binding commitments to buy and sell that led to massive losses starting in January 2012.

Others set to testify are JPMorgan's acting Chief Risk Officer Ashley Bacon; Peter Weiland, the Chief Investment Office's former head of market risk; Michael Cavanagh, the investment bank's co-chief executive officer; Douglas Braunstein, its vice chairman; Comptroller of the Currency Thomas Curry; Scott Waterhouse, the OCC's examiner in charge of JPMorgan, and Michael Sullivan, the OCC's risk analysis deputy comptroller.

Dimon was not scheduled to testify. He already testified before Congress twice about the wrong-way derivatives bets.

An OCC spokesman said in a statement Thursday the regulator recognized "shortcomings" in its supervision and was taking "steps to improve our supervisory process."

The bipartisan Senate committee report -- the product of more than 50 interviews and a review of 90,000 documents -- said JPMorgan managers "pressured" traders to lowball losses by $660 million, a previously undisclosed figure, and then played down the problems to authorities.

Dimon dismissed concerns about the losses as a "tempest in a teapot" on an April 13, 2012, earnings conference call.

Iksil, whose trades were at the center of the bank's losses, told a colleague last year the losses were "getting idiotic" and "I can't keep this going," a transcript of a phone conversation cited by the subcommittee said.

Federal investigators, seeking Iksil's side of the story, plan to interview the trader overseas, people briefed on the investigation told The New York Times.

Iksil refused to be interviewed by the Senate committee.

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