Exclusive - JPMorgan bet against itself in "Whale" trade

[dipsydoodle]

Source: Reuters

(Reuters) - There is a new twist in the London Whale trading scandal that cost JPMorgan Chase $6.2 billion in trading losses last year. Some of the firm's own traders bet against the very derivatives positions placed by its chief investment officer, said three people familiar with the matter.

The U.S. Senate Permanent Committee on Investigations, which launched an inquiry into the trading loss last fall, is looking into the how different divisions of the bank wound up on opposite sides of the same trade, said one of the people familiar with the matter.

The committee is expected to release a report on its investigation in the next few weeks.

The people familiar with the situation did not comment on the dollar value of the opposing trades placed by JPMorgan Chase & Co's investment bank traders, which was much smaller than the total positions put on by the CIO.

Read more: http://uk.reuters.com/article/2013/01/29/uk-usa-jpm-whale-idUKBRE90S14C20130129

[benld74]

1. And THIS is the supreme reason WHY derivatives produce NOTHING for ANYONE. OUTLAW THEM!!!

[SleeplessinSoCal]

2. I've no idea why they function the way they do. Found a link though.

Does this sound like what really happens?

http://www.investopedia.com/exam-guide/cfa-level-1/derivatives/purposes-benefits-derivatives.asp#axzz2JQ0dM2IB

[antigop]

3. pssst....Commodity Futures Modernization Act 2000 -- thank you, Bill Clinton --- NOT!

http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000

[AngryAmish]

6. I, for one, still think agricultural futures are a good thing.

[coalition_unwilling]

7. Absolutely. They allow farmers and businesses to hedge price and supply risks. The

key is to have effective regulations and oversight in place.

[benld74]

8. That is correct, but these asswipes take it to a ridiculous level and HURT the economy

[blueclown]

4. Wasn't the Volcker rule designed to prevent this from happening?

[Kelvin Mace]

5. Of course they did. It was a "no lose" bet

of they crippled themselves financially, the U.S. taxpayer would get stuck with the bill.

[geek tragedy]

9. Were these proprietary trades aiming to make money, hedges, or trades executed

on behalf of clients?

This sort of thing gets incredibly complex.