Bruno Michel Iksil, as he has been named by the Washington Post, is French-born, based in London and worked for the Chief Investment Office which has been at the heart of the bank’s recent losses.
In his Bloomberg trading profile he reportedly compared himself to Jesus by saying he could ‘walk on water’.
Speculation is mounting that a British-based trader dubbed ‘Voldemort’ is behind a $ 2billion loss for America’s JPMorgan bank
Understood to be one of the best paid traders in the City, he commutes to London from Paris on a weekly basis.
He is also nicknamed the ‘London Whale’ and the ‘White Whale’ because of the size of the positions he took.
He graduated in engineering from the Ecole Centrale in Paris in 1991, and was brought into the CIO unit to head its credit desk, an asset class the unit had not previously covered.
Little else is known about the trader, who was the subject of a Wall Street Journal report last month which revealed his ‘bets’ were so large they could ‘move prices in markets worth trillions of dollars’.
Bloomberg also said his group of traders had a $ 200billion portfolio and made a staggering $ 5billion in profits in 2010.
Neither the bank or Iksil, who has not commented on the reports, have been accused of legal wrongdoing.
But critics of their alleged speculative trading have called for legislation to prevent government-insured banks taking big risks on the markets with their own money.
Today’s speculation came after the U.S.’s larges bank said yesterday it lost $ 2billion in the past six weeks in the trading portfolio designed to hedge against risks the company takes with its own money.
BRITISH BANK SHARES HIT BY LOSS
Shares in major British banks fell today in the wake of JPMorgan Chase revealing a loss of $ 2billion in six weeks in trading on derivatives by its London operation.
Barclays, which has a large investment banking arm, was the biggest loser in London trading this morning, down 2.9 per cent at 202.7 pence in mid-morning trading.
Royal Bank of Scotland fell 2.2 per cent, while Lloyds Banking Group was down 1.8 per cent and HSBC dipped 1.3 per cent.
Ian Gordon, analyst at Investec Securities, said the share movement may be based on a fear that Morgan’s difficulty will lead to tougher regulations on banking.
‘Based on the limited information available, it’s attributed to egregious error within JPMorgan, so there is no reason to read across that specific loss to any other bank,’ Gordon said.
The company’s stock plunged almost 7 per cent in after-hours trading after the loss was announced. Other bank stocks, including Citigroup and Bank of America, suffered heavy losses as well.
‘The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought,’ CEO Jamie Dimon told reporters. ‘There were many errors, sloppiness and bad judgment.’
The trading loss is an embarrassment for a bank that came through the 2008 financial crisis in much better health than its peers. It kept clear of risky investments that hurt many other banks.
The loss came in a portfolio of the complex financial instruments known as derivatives, and in a division of JPMorgan designed to help control its exposure to risk in the financial markets and invest excess money in its corporate treasury.
Dimon said the losses were ‘somewhat related’ to the ‘London Whale’ story, but seemed to suggest that the problem was broader.
Dimon also said the company had ‘acted too defensively’ and should have looked into the division more closely.
The Wall Street Journal reported last month that JPMorgan had invested heavily in an index of credit-default swaps, insurance-like products that protect against default by bond issuers.
Hedge funds were betting that the index would lose value, forcing JPMorgan to sell investments at a loss.
VOLDEMORT’S BOSS PAID $ 14M
The boss of the British-based trader responsible for JPMorgan’s $ 2billion losses was herself paid $ 14million last year.
Ina Drew, 54, has been in charge of the London-based Chief Investment Office since February 2005.
Regarded as a key lieutenant of chief executive Jamie Dimon, she was effectively in charge of Bruno Michel Iksil.
She received a cash bonus of $ 4.7m, a share award of $ 7.1m, options worth $ 1.5 million and a base salary of $ 750,000, according to regulatory filings by the bank.
The losses came in part because financial markets have been far more volatile since the end of March.
Partly because of the $ 2billion trading loss, JPMorgan said it expects a loss of $ 800million this quarter for a segment of its business known as corporate and private equity.
It had planned on a profit for the segment of $ 200million. The loss is expected to hurt JPMorgan’s overall earnings for the second quarter, which ends June 30.
Dimon apologised for the losses, which he said occurred since the first quarter, which ended March 31.
‘We will admit it, we will learn from it, we will fix it, and we will move on,’ he said. Dimon spoke in a hastily scheduled conference call with stock analysts. Reporters were allowed to listen.
Among other bank stocks, Citigroup was down 3.3 per cent in after-hours trading, Bank of America was down 2.9 per cent, Morgan Stanley was down 2.4 per cent, and Goldman Sachs was down 2.2 per cent.
TRADERS WHO BET THEIR BANKS… AND LOST
U.S. bank Allfirst currency trader John Rusnack pleaded guilty to $ 691million fraud in 2002 – and was jailed for seven-and-a-half years.
Toshihide Iguchi, a former car dealer, lost more than $ 1billion at Japanese bank Daiwa in fraudulent trading over an 11-year period from 1984 onwards.
The Bank of Credit and Commerce International (BCCI) was seized by regulators in 1991 after auditors reported huge losses from illegal loans to corporate insiders and trades. It collapsed with $ 16billion debts and 250,000 savers lost money.
Japan’s Sumitomo Corporation trader Yasuo Hamanaka lost his firm $ 2.6billion in unrecorded copper market trades and was jailed for eight years in 1996.
British trader Nick Leeson single-handedly destroyed 233-year-old Barings Bank in 1995 by making losses and setting up a secret account to hide them. He was jailed for six-and-a-half years.
JPMorgan is trying to unload the portfolio in question in a ‘responsible’ manner, Dimon said, to minimise the cost to its shareholders. Analysts said more losses were possible depending on market conditions.
Dimon said the type of trading that led to the $ 2billion loss would not be banned by the so-called Volcker rule, which takes effect this summer and will ban certain types of trading by banks with their own money.
The Federal Reserve said last month that it would begin enforcing that rule in July 2014. Some analysts were skeptical that the investments were designed to protect against JPMorgan’s own losses.
They said the bank appeared to have been betting for its own benefit, a practice known as ‘proprietary trading’.
Bank executives, including Dimon, have argued for weaker rules and broader exemptions.
JPMorgan has been a strong critic of several provisions that would have made this loss less likely, said Michael Greenberger, former enforcement director of the Commodity Futures Trading Commission, which regulates many types of derivatives.
‘These instruments are not regularly and efficiently priced, and a company can wake up one day, as AIG did in 2008, and find out they’re in a terrific hole. It can just blow up overnight,’ said Greenberger, a professor at the University of Maryland.
The disclosure quickly led to intensified calls for a heavier-handed approach by regulators to monitoring banks’ trading activity.
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