Ex-jpmorgan bankers alleged to have covered up speculation debacle
Manhattan federal prosecutors accuse the men of covering up problems last year. On wednesday, they were indicted in new york district court on charges of falsifying documents and subsequently defrauding the bank’s shareholders.
The two men worked in the jpmorgan office in london. Bruno iksil, who became known as “london wal”, was also employed here. He got this nickname because of his gigantic financial bets that moved the entire market, but ultimately failed. The gambling led not only to a financial loss of 6.2 billion dollars, but also to a loss of reputation for the largest US bank. Iksil himself cooperates with investigators and is not prosecuted.
The men charged are a team leader and an employee who was responsible for recording the transactions. The prosecution considers it proven that they deliberately overstated the values of the financial bets in the books and thus concealed the true losses. Jpmorgan had initially warned of a $2 billion speculative loss in may 2012, but ultimately lost three times that amount of money. The bank had to retroactively adjust its business figures for the first quarter of 2012 downward.
The two bank employees who were forced to leave in the wake of the discovery of the losses now face imprisonment. In addition, the SEC is demanding a fine in a parallel civil lawsuit. However, according to information from U.S. Media, the two are out of the country. It concerns a spanish and a frenchman.
Because of the affair, the bank’s investment chief, ina drew, also had to leave – a confidante of jpmorgan chief jamie dimon. The latter himself had dismissed initial reports about the gigantic financial bets and their risks as a “storm in a teacup,” but later described the losses as the “most stupid and embarrassing situation” he had ever experienced. He took a pay cut, but is still firmly in the saddle, partly because the bank was able to post a record profit last year despite everything.
However, the speculative loss caused jpmorgan’s stock to plummet briefly, raising questions about whether banks have learned nothing from the financial crisis. Dimon had to appear before committees of the u.S. Congress several times. President barack obama used the case to promote his financial market reform, which dimon had repeatedly railed against. The bank did not comment on the charge now.
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