Criminal Inquiry Shifts To JPMorgan’s Mispricing Of Hundreds Of Billions In CDS

Criminal Inquiry Shifts To JPMorgan’s Mispricing Of Hundreds Of Billions In CDS: Is Dimon The Next Diamond?

From Reuters’ Matt Goldstein and Jennifer Ablan:

Before last week’s disclosure, the criminal probe largely had focused on the personal trading of some CIO traders, two of those sources said. The authorities were looking for evidence that some in London may have sold shares of JPMorgan in advance of the firm’s May 10 disclosure that it could lose a minimum of $2 billion on the derivatives trades gone awry. Now the investigation is focused on whether three JPMorgan employees in London committed fraud in reporting on their transactions. The bank is cooperating with authorities.

Obviously, nobody at the top had any idea of anything that was going on…

JPMorgan’s chief executive, Jamie Dimon, and some of his top lieutenants did not learn about the potential misconduct by some CIO employees until early last week, said these sources, who were not authorized to speak publicly on the matter

Maybe he should have been reading Zero Hedge? Because said otherwise, as JPM is allegedly to its CIO traders, so Goldman Sachs is to Fabrice Tourre. Remember him – he was the only person who in 2006-2008 was singlehandedly masterminding Goldman’s CDO fraud, which the firm settled for a then record sum. Nobody else: it was just him. Well, if the glove fits, JPM will do the same, and is about to throw some of its heretofore most profitable traders under the bus.

In fact, some of these traders who will have been “discovered” to be mismarking their books will most likely be the same people who have already lost their jobs and are in the process of clawing back pay:

So far, the trading loss has cost a number of people their jobs, including Ina Drew, the former head of the CIO, who resigned in May. Also gone from the bank are three traders in London, Bruno Iksil — who gained fame as the “London Whale” for his large trades — Achilles Macris and Javier Martin-Artajo. Lawyers in London for Iksil and Martin-Artajo did not return phone calls or email seeking comment. A lawyer in New York for Macris declined to comment. A lawyer in New York for Drew did not return request for comment. A family member who answered the phone at Drew’s home said she was not available for comment.

Here’s the problem: nobody will be stupid enough to believe for one second that the marks on hundreds of billions in securities passed from the front office straight to JPM’s 10-Q without vetting by middle office, back office, Treasury office, and even in some cases, counterparties. In other words, if JPM is indeed stupid enough to attempt to pull a “Fabrice Tourre” on CIO, it won’t work.

Actually scratch that: it may work, but it will involve a “fine”, i.e., a bribe of about $1 billion to the SEC, and countless promises of perpetual campaign donations to all the other corrupt members of congress and the senate. Which if this fraud flies by unscathed will mean all of them.

Ironically, if only JPM had indeed been honest, and told the public that not only did it have a loss, but it had discovered “material lapses in internal control” back on May 10 when the story hit, it would be a non-event by now. Instead, with the phased in revelations of events that even the most inexperienced trader knows full well all took place at the same time, it is becoming very obvious that Jamie Dimon and crew are merely hiding more and more revelations in some dark corner.

And what is scariest is that all this excludes the liability that the bank will with absolute certainty have as a result of Liborgate, and that it is one of the only three US members of the USD Libor fixing committee at the British Banksters Association.

We will leave the final words to our good friend from Bloomberg Jonathan Weil, who said that It was once inconceivable that Dimon might someday wind up like Barclays CEO Bob Diamond, who resigned last week after that company’s Libor scandal broke wide open. It’s not anymore.”

It certainly is not.



2 Responses to “Criminal Inquiry Shifts To JPMorgan’s Mispricing Of Hundreds Of Billions In CDS”
  1. Guy_Fawkes says:

    How can I push the envelope??? I would love to see this man fall into a large vat of boiling oil.

  2. 1ofthemany says:

    Past time for him to go…Jail pure and simple!!! Jail him!!! Now is not soon enough.

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