FACTBOX - Key events in JPMorgan's 'Whale' trading losses

Thu Jan 17, 2013 3:48am IST

A trader walks past the JP Morgan booth on the floor of the New York Stock Exchange September 18, 2008. REUTERS/Brendan McDermid/Files

A trader walks past the JP Morgan booth on the floor of the New York Stock Exchange September 18, 2008.

Credit: Reuters/Brendan McDermid/Files

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REUTER - JPMorgan Chase & Co(JPM.N) released two internal reports on Wednesday that outlined how the bank lost more than $6 billion on trades made by its Chief Investment Office (CIO), which invests excess cash.

Based on the findings, the bank's board determined responsibility ultimately belonged to Chief Executive Jamie Dimon and slashed his 2012 pay. Here is a timeline of key events based on the report compiled by a management task force:

- By late December 2011, the CIO was considering major changes to the bank's synthetic credit portfolio because of a decision by the bank to reduce risky assets and reflect a more positive view on the economy.

- In mid-January 2012, a trader advised Chief Investment Officer Ina Drew that unwinding the portfolio had been costly. Drew said the team should be more sensitive to profits and losses from their trading, according to the report.

- By the end of January, the portfolio's year-to-date, mark-to-market losses were around $100 million. By the end of February, they had grown an additional $69 million. Traders continued to increase the size of the portfolio until Drew suspended trading in it around March 23. By the end of March, losses were around $718 million.

- On April 5, Drew told the JPMorgan operating committee that the Wall Street Journal and Bloomberg News were planning stories about trades made by a CIO employee nicknamed the "London Whale." She provided analyses of the portfolio to Dimon and other executives that broadly concluded that losses were "temporary and manageable."

- On an April 13 earnings conference call, Dimon agreed with an analyst's comment that concerns about the trades were a "tempest in a teapot." Chief Financial Officer Doug Braunstein said the bank was "very comfortable" with its positions.

- On May 10, the bank disclosed problems with the trading strategy, saying it had lost more than $2 billion so far and could lose more. The announcement sparked a public outcry over another major blunder by a big bank.

- On May 14, JPMorgan announced Drew was retiring as chief investment officer and would be replaced by Matt Zames.

- On July 13, the company reported that year-to-date losses on the trades were about $5.8 billion, with more losses still expected.

- On November 19, JPMorgan announced that Marianne Lake would become CFO, succeeding Braunstein, who would become vice chairman.

- On January 14, 2013, U.S. banking regulators ordered the bank to tighten its risk controls as a result of its bad trades.

- On January 16, JPMorgan released two reports on the trades and disclosed that Dimon's 2012 pay would be half of what he made in 2012. Dimon told reporters that the Whale trade was now "very close to being a non-issue from a trading standpoint." (Reporting By Rick Rothacker in Charlotte, North Carolina; Editing byh Steve Orlofsky)

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