A city worker passes the headquarters of bank JPMorgan Chase on March 17, 2008 in London, England.
When JPMorgan Chase announced a rare after-hours, unscheduled conference call on May 10, 2012, reporters and analysts were fairly sure it couldn’t be good news. That’s when CEO Jamie Dimon announced, that the bank had somehow lost $2 billion in just six weeks as a result of disastrous trades by its risk-management division. Dimon chalked the monster loss up to “errors, sloppiness and bad judgment,” and the company traced the trail back to the Chief Investment Office in London, which manages the risk JPMorgan takes with its own money. No single person was responsible for the trading blunders, bank executives told Bloomberg, though a trader in that office known as the “London Whale” and “Voldemort” was under scrutiny for moving derivatives worth around $10 trillion.
The losses were a great embarrassment to JPMorgan Chase, which emerged from the 2008 financial crisis in much better shape than its rivals thanks to its more conservative investments. Now, it looks just as bad as the rest; as former analyst and Business Insider cofounder Henry Blodget tweeted following the call, “It should now be crystal clear to all that Wall Street has no f’ing idea how to assess and monitor risk.”
(READ MORE: ‘Whale’ Fail: JPMorgan’s $2 Billion Blunder Tied to London Trader)