JPMorgan Chase & Co's shock trading loss of at least $2 billion from a failed hedging strategy knocked financial stocks across the globe on Friday, as well as the reputation of the biggest US bank by assets and its CEO Jamie Dimon. For a bank lauded for navigating the fallout from the 2008 financial crisis without reporting a loss, the errors are embarrassing, especially given Dimon's criticism of the so-called Volcker rule to ban proprietary trading by big banks. Dimon conceded the losses, which could rise by a further $1 billion, were linked to a Wall Street Journal report last month about a London-based trader Bruno Iksil, nicknamed the 'London Whale', who, the paper said, amassed an outsized position which hedge funds bet against. In a Securities and Exchange Commission filing, JPMorgan reported that since the end of March, its Chief Investment Office has had significant mark-to-market losses in its synthetic credit portfolio. JPMorgan had informed the UK's Financial Services Authority (FSA) of the situation, but this was a regulatory requirement and there was no indication at this stage that the regulator would take any action, a source familiar with the situation said. Talks between the bank and the watchdog were continuing. Iksil and the Chief Investment Office (CIO) where he works, are known by rival credit traders for taking extremely large positions. A friend and former JPMorgan colleague said Iksil and his team were not involved in so-called prop trading, where a bank makes bets with its own money, and its activities were known about at the highest levels. Dimon said the problem was with the way the hedging strategy had been carried out.
