JPMorgan Could Close Office That Drove $2B Loss

Entire staff at risk in London investment office; Warren calls for Dimon to leave NY Fed

JPMorgan's headquarters in New York. (Photo: AP) JPMorgan's headquarters in New York. (Photo: AP)

The chief investment office of JP Morgan in London, which last week made the headlines for losing $2 billion in trades, could be in danger of closing, its entire staff dismissed.

Bloomberg reported Monday that the first resignations could come this week as investigations continue into whether the office may have taken action to hide risks. An unnamed source said that so far there is no evidence that such is the case, but the resignation of Ina Drew, who ran the office from New York, was expected to be accepted shortly. Jamie Dimon, CEO of the bank, at first resisted accepting her resignation.

The report cited a Wall Street Journal article that said Drew would leave, as would Achilles Macris, who ran the trading team, and Javier Martin-Artajo, a trader on his team. Reuters said the latter two would be asked for their resignations. A Business Insider report Monday also said that the two have been stripped of their trading responsibilities, along with Bruno Iksil—the so-called “London Whale,” also known as Voldemort, for the massive size of his trades. Iksil may also be asked to leave, although at present, the report says, that is not definite. The office employs a few dozen people.

In another report, Bloomberg said that the Securities and Exchange Commission (SEC), the Federal Reserve and the Commodity Futures Trading Commission (CFTC) are investigating the losses. Dimon himself is said to have changed the direction of the London investment office to boosting profits from hedging risks, according to April reports. A former head of credit trading in the office, David Olson, recalled two executives telling him in 2006, “We want to ramp up the ability to generate profit for the firm. This is Jamie’s new vision for the company.”

Dimon also recently dismissed arguments made by former Federal Reserve chief Paul Volcker and Richard Fisher, president of the Federal Reserve Bank of Dallas about “too-big-to-fail” banks as "infantile" and "nonfactual," according to a Sunday New York Times report. At a private Dallas dinner party held by the bank for a number of its private clients, he also went on to voice highly critical remarks about Fisher, which were said to have “taken aback” some members of his audience.

Elizabeth Warren, a Democratic candidate for the Massachusetts Senate and consumer advocate, called Sunday for Dimon to step down from his position as a director at the Federal Reserve Bank of New York. The Hill reported that Warren said in a statement on her website that Dimon’s departure from that spot would “send a signal to the American people that Wall Street bankers get it and to show that they understand the need for responsibility and accountability.”

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