Sunday, December 22, 2013

London whale

The London whale
was a UK-based trader called Bruno Iksil who worked for JPMorgan. He was known as the London whale among hedge funds and other traders, due to his big, and as it turned out, ill-advised position in a credit derivatives index. 

JP Morgan's chief executive at the time, Jamie Dimon, initially dismissed the claims – made by anonymous fund managers quoted in articles in the Wall Street Journal and Bloomberg – as a "tempest in a teapot". But as one of the anonymous hedge fund managers commented, "It wasn't just a giant whale, it was the size of the Atlantic Ocean".

The London whale in the news
In July 2012, JPMorgan announced losses of $5.8bn which it attributed to the London whale, who was also sometimes known as Voldemort. Iksil headed the credit desk in the London unit of JPMorgan's 400-strong chief investment office.

In October 2012 the bank issued a claim in London's High Court against Javier Martin-Artajo (pictured) who supervised Iksil.

In January 2013 it emerged that Jes Staley, who had been head of JPMorgan's investment bank, although in a separate division to where Iksil was working, had crossed the divide to join BlueMountain Capital Management – one of the hedge funds that brought down the London whale.

In September 2013, JPMorgan was hit by $920m in fines over the London whale trades. In settlements with four regulators, JPMorgan's management was found to have withheld information from its audit committee, including the fact that it had hired an outside law firm to examine "significant control issues" around the disclosure and valuation of credit derivatives.

In October 2013, it emerged that JPMorgan had agreed to pay a $100m fine to the Commodity Futures Trading Commission and accepted that the London Whale trading episode had a manipulative effect on credit derivative markets.

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