The traders were able to hide losses for months by pricing their positions in a favorable way, but they soon discovered that their strategy wasn’t sustainable, according to the report, which contains e-mails, instant messages and transcripts of taped phone calls.
In one phone conversation with a colleague on March 15, 2012, Bruno Iksil, the trader who became known as the London Whale, got agitated, worrying that the portfolio had grown too large, making it difficult to contain losses:
“It’s getting idiotic. … Now it’s worse than before … there’s nothing that can be done, absolutely nothing that can be done, there’s no hope. … The book continues to grow, more and more monstrous.”
On March 20, the increasingly panicky Mr. Iksil had another phone conversation, this time with his manager, Javier Martin-Artajo. Earlier the same day, an e-mail was sent to a number of people, including Ina Drew, the head of the bank’s chief investment office in New York, about the growing problems in the portfolio. Mr. Martin-Artajo wasn’t pleased by that. In the conversation, Mr. Martin-Artajo referred to Achilles Macris, the head of the chief investment office in London. Following are excerpts from the report:
MR. IKSIL Yeah, so, yeah we sent, we sent an estimate — down $40 million today. …
MR. MARTIN-ARTAJO O.K., O.K. I just don’t want you to do this. I don’t know why you’ve done it anyway, you’ve done it. . . . You should have told me this because it doesn’t help us for the conversation for tomorrow.
MR. IKSIL I know it’s embarrassing but —
MR. MARTIN-ARTAJO Yeah, I don’t understand your logic, mate. I just don’t understand. I’ve told Achilles. He told me that he didn’t want to show the loss until we know what we are going to do tomorrow. But it doesn’t matter. I know that you have a problem; you want to be at peace with yourself. It’s O.K., Bruno, O.K., it’s all right. I know that you are in a hard position here.
According to the report, Mr. Iksil indicated the differences between reported and unreported losses were getting too big to ignore.
MR. IKSIL You know, it’s just that, I have to, I don’t know, I thought, I thought that was, that was not realistic, you know, what we were doing, and I said probably I was wrong, you know, I thought that it was this estimate before tomorrow, you know, was the way to, because I know Ina is going to read the comments, so, maybe it will leave some time and she will have different questions, or, I don’t know. … It’s one mistake for another here, because if I don’t —
MR. MARTIN-ARTAJO No, no, man, no man.
MR. IKSIL I think I do a worst one, you know. It’s sort of my logic is strange but, in fact I have to choose between one bad thing and one thing that I think was worse.
Article source: http://www.nytimes.com/2013/03/17/business/senate-report-shows-anxious-moments-for-jpmorgan-traders.html?partner=rss&emc=rss
Speak Your Mind
You must be logged in to post a comment.