JPMorgan’s Loss Ranks Among Biggest Bank Trading Debacles

JPMorgan Chase & Co. (JPM)’s $2 billion loss at its chief investment office ranks among the biggest trading debacles.

The firm’s chief investment office, run by Ina Drew, 55, took flawed positions on synthetic credit securities that remain volatile and may cost an additional $1 billion this quarter or next, Chief Executive Officer Jamie Dimon told analysts yesterday. Losses mounted as New York-based JPMorgan tried to mitigate transactions designed to hedge credit exposure.

Following is a time-line of previous losses.


Company                  Year      Detail

JPMorgan                 2012      $2 billion loss from
                                   positions in synthetic
                                   credit securities

UBS                      2011      $2.3 billion loss from
                                   unauthorized trading

Credit Suisse            2008      Wrote down $2.65 billion
                                   over fourth quarter of 2007
                                   and first quarter of 2008
                                   after discovering debt
                                   securities mis-priced by
                                   employees

Societe Generale         2008      Lost 4.9 billion euros ($6.3
                                   billion) before taxes after
                                   trader went beyond permitted
                                   limits on European stock
                                   index futures

Morgan Stanley           2007      Reported $9.4 billion of
                                   writedowns on U.S. subprime
                                   and other mortgage-related
                                   exposures established by a
                                   portfolio run by a
                                   proprietary-trading team

Bank of Montreal         2007      Wrong-way bets on natural gas
                                   led to a pretax loss of about
                                   C$680 million ($676 million)

Amaranth Advisors LLC    2006      Trader Brian Hunter’s bad
                                   bets on natural gas triggered
                                   $6.6 billion of losses

Refco Inc.               2005      Declared bankruptcy after
                                   hiding $430 million of debt

China Aviation Oil       2004      Lost $550 million on
(Singapore) Corp.                  speculative oil-futures
                                   trades, forcing debt
                                   restructuring

Allied Irish Banks Plc   2002      Trader hid $691 million in
                                   currency market losses

Plains All American      1999      Lost $160 million because of
Pipeline LP                        unauthorized crude-oil
                                   trading by an employee

Long-Term Capital        1998      Lost $4 billion after a debt
Management                         default by Russia

Peregrine Investments    1998      Collapsed from at least
Holdings Ltd.                      $300 million of debt bought
                                   from insolvent companies

National Westminster     1997      Disclosed $125 million
Bank Plc                           charge to cover
                                   options-trading loss

Deutsche Morgan Grenfell 1996      Fired fund manager Peter
                                   Young for unauthorized
                                   trading and paid $279 million
                                   to bail out investors

Sumitomo Corp.           1996      Disclosed a $2.6 billion loss
                                   on unauthorized copper trades
                                   by Yasuo Hamanaka

Daiwa Bank               1995      Disclosed a $1.1 billion loss
                                   from unauthorized trades

Barings Plc              1995      Collapsed after trader Nick
                                   Leeson racked up $1.4 billion
                                   in losses

Orange County,           1994      Lost $1.7 billion from debt
California                         and derivatives used to
                                   expand its investment fund

Kidder Peabody & Co.     1994      Took a $210 million charge
                                   to reflect what it said were
                                   false bond trading profits by
                                   trader Joseph Jett

Codelco                  1994      Trader Juan Pablo Davila lost
                                   more than $200 million
                                   speculating on copper

Metallgesellschaft AG    1993      Lost more than $1.5 billion
                                   trading oil futures contracts

Drexel Burnham           1990      Filed for bankruptcy after
Lambert Inc.                       pleading guilty to charges of
                                   insider trading and stock
                                   manipulation

Merrill Lynch & Co.      1987      Mortgage trader accused of
                                   racking up $377 million loss
                                   in unauthorized trades

To contact the reporter on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net;

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