In April and May 2012, large trading losses occurred at JPMorgan’s Chief Investment Office, based on transactions booked through its London branch. The unit was run by Chief Investment Officer Ina Drew, who has since stepped down. A series of derivative translations involving credit default swaps (CDS) were entered, reportedly as part of the bank’s “hedging” strategy. Trader Bruno Iksil, nicknamed the London Whale, accumulated outsized CDS positions in the market. An estimated trading loss of $2 billion was announced, with the actual loss expected to be substantially larger. These events gave rise to a number of investigations to examine the firm’s risk management systems and internal controls.
JPMorgan beared more than $2 billion investment loss due to judgement errors based on inaccurate market prospect. Bruno Iksil, a trader in JPMorgan London office who was nicknamed “London Whale” after his excellent investment performances, was found out to be the person in charge of the transaction.
Due to such instant judgement mistake, JPMorgan is to pay approximately $100 million worth of penalty to the Commodity Futures Trading Commission.