JPMorgan $2 billion trading loss, reputation hit
Posted by Xeno on May 11, 2012
JPMorgan Chase & Co said on Thursday that it suffered a $2 billion trading loss from a failed hedging strategy, a disclosure that hit financial stocks and the reputation of the bank and its prominent CEO, Jamie Dimon.
Since the end of March, the company’s Chief Investment Office “has had significant mark-to-market losses in its synthetic credit portfolio,” the company said in a quarterly filing with theSecurities and Exchange Commission.
JPMorgan said that other gains partially offset the trading loss, and that it estimates that the business unit with the portfolio will post a loss of $800 million in the second quarter, excluding private equity results and litigation expenses. That compares with a profit of about $200 million that the bank had forecast previously.
“It could cost us as much as a $1 billion or more,” Dimon said in a hastily scheduled conference call in which he apologized to stock analysts. “It is risky and it will be for a couple quarters,” Dimon said…
Who was the winner in this $2 billion loss? I wonder if gold will start to climb again.