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20120515 Follow Me Three to Exit J.P. Morgan
shenxiaoqiang
1779 9
2012-05-14
Three to Exit J.P. Morgan
Updated May 14, 2012, 8:37 a.m. ET
By DAN FITZPATRICK and GREGORY ZUCKERMAN(from WSJ)


Three high-ranking officers at the center of J.P. Morgan Chase JPM -10.23%& Co.'s giant trading blunder （大错）are expected to leave the firm this week, said people familiar with the situation, and losses on the trade have grown.
Expected to leave as soon as Monday are Ina Drew, who has run the risk-management group tied to the losses since 2005; Achilles Macris, who was in charge of the London-based operation that placed the questionable trades; and trader Javier Martin-Artajo.

As of last Thursday the bank had lost $2.3 billion on a credit derivatives trade gone awry, but that figure grew by about $150 million on Friday, according to a person familiar with the matter. Executives are prepared for another $1 billion of possible losses this quarter from these positions, as well as another $1 billion of potential losses over the next year or so, according to someone close to the matter. That would mean a possible total loss of more than $4 billion, though the positions also could rebound in value, slicing any loss, the person noted.
Ms. Drew, Mr. Macris and Mr. Martin-Artajo are exiting because of their direct involvement in the mistakes that led to the losses. Ms. Drew set the trading strategies for the unit, and Mr. Macris and Mr. Martin-Artajo were responsible for carrying out her instructions and overseeing the problematic portfolio.
Ms. Drew initially was dismissive of concerns about the trading positions, said people familiar with the matter. But once the size of the losses became apparent to many in the company, she offered her resignation. That resignation is expected to be accepted by Chief Executive Officer James Dimon as early as Monday.

Another departing executive is likely to be trader Bruno Michel Iksil, nicknamed the "London Whale（伦敦鲸鱼）" for the big positions he took in credit markets on behalf of the chief investment office. But it isn't yet clear when Mr. Iksil would leave, said people familiar with the situation. Mr. Iksil reported to Mr. Martin-Artajo and Mr. Macris, according to people familiar with the matter.
The departures come as Mr. Dimon, long viewed as one of the industry's savviest risk managers, seeks to rebound from the miscue（失误）.
The moves aren't likely to ease growing pressure on Mr. Dimon to explain more about the trades, why they went bad and why better risk controls were not in place earlier. The Chief Investment Office unit responsible for the bad trades had weaker risk management controls than other parts of J.P. Morgan—part of the reason why the positions were allowed to balloon without greater scrutiny, said people familiar with the situation. Mr. Dimon was informed of the group's trading, though it's not clear what details he was aware of.
People inside the company are trying to figure out why the office changed a model measuring total value at risk, and why the data added to the model was less accurate than before, one of these people said. Executives also are trying to determine if there was any effort to hide the losses and why problems were not elevated sooner.

Some shareholders are asking for governance changes that would dilute Mr. Dimon's hold over J.P. Morgan and strengthen board oversight. On Tuesday, Mr. Dimon will go before shareholders in Tampa, Fla., and will face a vote calling on the bank to adopt an independent chairman. Mr. Dimon is both chief executive and chairman of J.P. Morgan.
"J.P. Morgan Chase shareholders need to act together and tell the board that we want meaningful controls over risk and real oversight of management," the Association of Federal, State and City Municipal Employees, which placed that proposal on the meeting agenda, said in a release.
The CtW Investment Group, which acts as an advisory group to union pension funds that own 10 million J.P. Morgan Chase shares, is drafting a letter to the board demanding the resignation of Ellen Futter from the board's risk committee, the installation of incoming director Timothy Flynn as interim chair of the committee and an appointment of an outside risk expert to investigate the failures surrounding the loss.
One of the first steps J.P. Morgan Chase took was to strip Messrs. Macris, Martin-Artajo and Iksil of trading responsibilities, said one person close to the matter. They report to the 55-year-old Ms. Drew, who manages a portfolio worth $374 billion.
Mr. Macris was in charge of the London team that carried out the trades that went awry, and Mr. Martin-Artajo was a managing director on Mr. Macris' team.

Mr. Macris, a native of Greece, is an intense, outspoken man with a penchant for risk taking, according to someone who worked with him. Mr. Macris is about 5'4", but cut a large figure on the bank's trading floor, the person said, chewing dozens of pieces of nicotine gum throughout the day and sometimes twirling a pair of fashionable glass frames, the person said. Mr. Martin-Artajo, Mr. Macris's right-hand man, is a tall native of Spain who is an avid bicyclist.
The bank's CIO unit holds many trading positions. Late last year, they included insurance against defaults, or credit-default swaps, by 121 various companies on an index called the IG 9 maturing in December of this year. Meanwhile, the group sold CDS contracts on a similar index maturing in December 2017.
Early this year, however, Mr. Iksil and his group decided to become more bullish on corporate credit, according to traders. So Mr. Iksil began selling more CDS contracts on that corporate-debt index maturing in December 2017, a way to make a wager on the health of companies.
This position, and other related ones, became massive in the spring of this year, prompting some hedge funds and others to take opposing positions, the traders say. When the market started moving against the company, the losses mounted and the company found it difficult to exit the trades because its positions were so large.
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kangjian3112
2012-5-14 22:38:47
楼主，很多专业术语啊！查了半天才看懂八层，坚持啊
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happylife87
2012-5-14 23:38:57
Risks are always vital when small possibility becomes reality. See who will pay for the cost and how those involved will be punished.
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whachel1976
2012-5-15 07:07:59
In public financial market, the manager's decisions and actions are customers' concerns. Even if they resign, the event itself will affect the market quite a great deal.
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桶桶nancy
2012-5-15 08:01:56
Thx for shenxq's sharing~  the topic is really hot these day!  According to my opinion, regarding the matter as gaming between the government and market. European situations is not easy to get a little bit better, Wall Street jump out casting chaos.The effect of JPmorgan is just the beginning, Although itshuge losses may be the single event, after theall- kowns background of global market with debt crisis, at the same time it will worsen the marker hedge wood~

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桶桶nancy
2012-5-15 08:05:15
happylife87 发表于 2012-5-14 23:38
Risks are always vital when small possibility becomes reality. See who will pay for the cost and how ...
Continuously pay attention to the chain reactions~
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