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JPMorgan Erases Stock Drop Fueled by London Trading Loss

JPMorgan Shares Erase Drop Fueled by Disclosure of Whale Loss
JPMorgan Chase & Co. bank branch in New York. Photographer: Scott Eells/Bloomberg

JPMorgan Chase & Co., the lender that plunged as much as 24 percent in the month after disclosing a multibillion-dollar trading loss, has erased that decline.

The bank’s stock climbed 3.7 percent to $41.40 yesterday in New York, eclipsing the $40.74 closing price of May 10, when Chief Executive Officer Jamie Dimon announced what was then a trading loss of about $2 billion at the chief investment office in London. The loss this year now stands at $5.8 billion.

The wrong-way bets on derivatives are the focus of an escalating investigation by a U.S. Senate panel and at least 11 agencies, including the Justice Department and Securities and Exchange Commission. The stock remains 6.6 percent below the April 5 close, when Bloomberg News first reported the lender had amassed an illiquid position on credit derivatives, and is the second-worst performer in the 24-company KBW Bank Index.

“Though the loss was quite large, it was a loss that was not systemic to their investment-securities portfolio or their capital-markets operations,” said Gerard Cassidy, an analyst at RBC Capital Markets who rates the shares outperform. “The bigger picture for the company has and continues to improve.”

JPMorgan slid as much as 10 percent the day after Dimon, 56, disclosed the loss, the most in more than three years, and closed as low as $31 on June 4. The lender lost $5.8 billion on the trades during the first six months of this year and has said it could lose as much as $7.5 billion total while closing out the position.

At the center of the trading was Bruno Iksil, a French-born trader in London who ran the credit-derivatives book that generated the loss. He came to be known as the London Whale because the size of his bets grew so large.

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