JPMorgan: Embarrassing Trading Loss Highlights Weakness In Financial Sector
By Robert Broens: Shares of JP Morgan Chase & Co. (JPM) were hit hard in after hours trading after the "winning bank" of the financial crisis announced a surprise $2 billion trading loss.
The Synthetic Credit Loss
JPMorgan announced a surprise loss of $2 billion in its Chief Investment Office. This division of the bank is responsible for investing "excess funds" from its trading activities into safe securities. The division lost the money after an investment in synthetic credit securities, proved riskier than previously expected.According to Chief Executive Officer Jamie Dimon the portfolio has proven to be "riskier, more volatile and less effective as an economic hedge than the firm previously expected. There were many errors, sloppiness and bad judgment."
Former employees of the unit say the Chief Investment Office has transformed into a unit which takes bigger and more riskier bets under command of CEO Jamie Dimon. Unwinding theComplete Story »