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Criminal Inquiry Shifts To JPMorgan's Mispricing Of Hundreds Of Billions In CDS: Is Dimon The Next Diamond?
On the last day of May, when we first learned via Bloomberg that there was even the scantest likelihood that JPM may have been massaging its CDS marks within the (London-based of course) CIO organization - the backbone of hundreds of billions in notional exposure, and thus a huge counterfeited benefit to trader bonuses and corporate earnings - we wrote, "The Second Act Of The JPM CIO Fiasco Has Arrived - Mismarking Hundreds Of Billions In Credit Default Swaps" in which we explained precisely how this activity would and did take place, precisely why other traders caught doing the same are on the verge of being thrown in jail, precisely why everyone else does it, and precisely why the biggest CDS self-reporting and client/banker owned-organization (this is where images of Libor should appear), MarkIt, may well be implicated in everything - very much in the same way that the BBA is the heart of Lie-borgate. Because unlike all other allegations of impropriety, most of which rely on Level 2 and Level 3 assets whose valuations are in the eye of the oh so very sophisticated beholder (in this case JPM) who has complex DCFs and speaks confidently when explaining marks to naive, stupid outsiders (in other words baffles with bullshit), when it comes to one of the last places where Mark to Market is still applicable and used: the OTC CDS market, and where daily P&L records are kept, it will take any regulator, enforcer, or criminal investigator precisely 1 minute to find out if there was fraud, or gambling, going on here.
Then lo and behold, none other than JPM admitted minutes before releasing its Q2 earnings that it had been doing precisely what Zero Hedge accused it of doing nearly 2 months earlier (but of course Jamie Dimon had no idea, no idea, what the media accused his firm of doing), and in doing so exposed itself to just as much litigation risk as Barclays in the Lie-borgate scandal, while further throwing a monkey wrench into the CDS market, where all the other banks (who had been doing just the same), will no longer be able to pick off the bid/ask spread in the process crushing CDS trader bonuses, and resulting in billions in foregone imaginary profits.
Most importantly, it opened up the firm to a criminal investigation. Which as Reuters reports, is precisely what has now happened.
From Reuters' Matt Goldstein and Jennifer Ablan:
Before last week's disclosure, the criminal probe largely had focused on the personal trading of some CIO traders, two of those sources said. The authorities were looking for evidence that some in London may have sold shares of JPMorgan in advance of the firm's May 10 disclosure that it could lose a minimum of $2 billion on the derivatives trades gone awry.
Now the investigation is focused on whether three JPMorgan employees in London committed fraud in reporting on their transactions. The bank is cooperating with authorities.
Obviously, nobody at the top had any idea of anything that was going on...
JPMorgan's chief executive, Jamie Dimon, and some of his top lieutenants did not learn about the potential misconduct by some CIO employees until early last week, said these sources, who were not authorized to speak publicly on the matter
Maybe he should have been reading Zero Hedge? Because said otherwise, as JPM is allegedly to its CIO traders, so Goldman Sachs is to Fabrice Tourre. Remember him - he was the only person who in 2006-2008 was singlehandedly masterminding Goldman's CDO fraud, which the firm settled for a then record sum. Nobody else: it was just him. Well, if the glove fits, JPM will do the same, and is about to throw some of its heretofore most profitable traders under the bus.
In fact, some of these traders who will have been "discovered" to be mismarking their books will most likely be the same people who have already lost their jobs and are in the process of clawing back pay:
So far, the trading loss has cost a number of people their jobs, including Ina Drew, the former head of the CIO, who resigned in May. Also gone from the bank are three traders in London, Bruno Iksil -- who gained fame as the "London Whale" for his large trades -- Achilles Macris and Javier Martin-Artajo.
Lawyers in London for Iksil and Martin-Artajo did not return phone calls or email seeking comment. A lawyer in New York for Macris declined to comment.
A lawyer in New York for Drew did not return request for comment. A family member who answered the phone at Drew's home said she was not available for comment.
Here's the problem: nobody will be stupid enough to believe for one second that the marks on hundreds of billions in securities passed from the front office straight to JPM's 10-Q without vetting by middle office, back office, Treasury office, and even in some cases, counterparties. In other words, if JPM is indeed stupid enough to attempt to pull a "Fabrice Tourre" on CIO, it won't work.
Actually scratch that: it may work, but it will involve a "fine", i.e., a bribe of about $1 billion to the SEC, and countless promises of perpetual campaign donations to all the other corrupt members of congress and the senate. Which if this fraud flies by unscathed will mean all of them.
Ironically, if only JPM had indeed been honest, and told the public that not only did it have a loss, but it had discovered "material lapses in internal control" back on May 10 when the story hit, it would be a non-event by now. Instead, with the phased in revelations of events that even the most inexperienced trader knows full well all took place at the same time, it is becoming very obvious that Jamie Dimon and crew are merely hiding more and more revelations in some dark corner.
And what is scariest is that all this excludes the liability that the bank will with absolute certainty have as a result of Liborgate, and that it is one of the only three US members of the USD Libor fixing committee at the British Banksters Association.
We will leave the final words to our good friend from Bloomberg Jonathan Weil, who said that "It was once inconceivable that Dimon might someday wind up like Barclays CEO Bob Diamond, who resigned last week after that company's Libor scandal broke wide open. It's not anymore."
It certainly is not.
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I think the Fed would chit its pants the more they see their dry powder and fancy meals going by the way side. What happens when the hand that feeds you goes away, the stomach does not feel like eating. Forget the house doctor, the liquidator is the new boss in town.
I'm mad as Hell and I'm not going to take this anymore
http://www.youtube.com/watch?v=rGIY5Vyj4YM
It matters not how many felonies JPM commits. Thanks Shelby. Doin' a heckuva job. Sells out his country for less than $100K.
http://www.opensecrets.org/politicians/summary.php?cid=N00009920
jamie dimon, is just a fucking drunk, and a crook. he's definitely not the brains behind jpm. and his wife is jewish.
Has to be a new reform Jew. Orthodox and Conservative Jews are not being "Jewish" if they intermarry. These groups also consider new reform Jews to "not really be Jews."
Jew isn't the problem.
His wife is Catholic. The meet as classmates at HBS (yes, she is a Harvard Biz School graduate as well).
Neither of them are drunks, or jews or technically crooks.
He is the brains behind JPM.
You see hard as this is to believe, the issue is not alcohal, or religion. The issue is a Kleptocratic class of bankers who due to the sheer size, complexity and interconnectedness of the institutions they run, are now the CEO's of WMD. For that they are paid 100's of millions of dollars.The world is now run on behalf of the Banks. And the politicians are their bought and paid for puppets.
So any discussion of jews or of drunks, actually plays right into their hands. Because it avoids a real discussion about the danger they represent to us all.
First thing we do let's kill all the banksters. Where's Shakespeare when you need him?
BS. Tyler proved precisely that they are crooks and Dimon fell back on the tried and false "CEO defense" as usual ie... " I had no idea what was going on". How many times now have these CKO's (Chief Klepto Officers) been saying that?
" (but of course Jamie Dimon had no idea, no idea, what the media accused his firm of doing)"
JPM defrauded Jefferson County Alabama, Shelby's home state. Not only was he not outraged, not only did no-one from JPM go to jail, but they still do business with JPM!! THEY DESERVE TO BE RIPPED OFF!!
http://www.bloomberg.com/news/2011-08-12/jpmorgan-proves-bond-deal-death...
I am sure Jamie Dimon is going to eat shit. Sarh
Listen up.
There is no way for a trader to put a mark on stuff by himself. It must pass through risk management. In fact former employees in risk management or other back office types will tell you that they mark the books at end-of-periods, such as end of month or end of quarter. Not traders. A trader may mark stuff intraday because he needs to calibrate relationships of option volatility to default probability, et cetera. But the back office / risk are the people putting real MTM on. Don't believe me, ask the fucking fucks who work there.
So once again Dimon's story doesn't hold water.
So the question is, why is Mr. Dimon such a bad liar? What is the real agenda? Is he being set up, or seriously, is he this stupid? Tyler is right, if he copped to the bad marks story it would be over by now.
Ole Seize Mars has been around the block. And I wouldn't go near that firm with a 10-foot pole. Too many cross-currents; treacherous water...
the three big lies are rapdily shifting towards:
1) Jamie Dimon knew nothing
2) SEC & CFTC regulatory watchdogs only watch porn on their lunchbreaks
3) LIBOR was never mis-stated or manipulated along with every mortgage, credit card, student loan and every other financial instrument with an interest rate computed using LIBOR
I'm hoping against hope that Dimon will finally get what's coming to him.....here on Earth and in the afterlife.
Please...please...please. If I get my wish - I'm throwing a heck of a party.
Unfortunately to open up this HUGE can of worms...a lot of sh*t has to leak out. Unsure if "they" will allow this to happen.
He will never go to jail, because he has his head so far up their ass, that they have no clue what is really going on. it would be nice if for just once, they woke up one morning and had a fucking clue. he is the Gloden Boy, He can do no wrong. All I can say is Take care of your familys and true freinds, because, shit is going to hit the fan. Maybe not tomorrow, or the next day, but it is coming, and speaking for myself, I hope the SOB, gets it where it hurts.
True that....but geez, this "I didn't know" stuff is wearing thinner than thin. He's like a teenager who has misbehaved and all he can say in his defense is "I didn't know" or "I didn't do it". God man, get some kahunas and at least own up to a little something once in a while.
Not (sic) "Gloden."
Pyrite.
Let's start calling him the Pyrite Boy.
Please keep Guantanamo open and safe the waterboarding instruction manuals.
I would imagine there are some lights on late tonight in the offices of Dimon and several associates. No doubt a lot of doc manipulation and the paper shredders are smoking. Not that the SEC et. al. would actually ever find anything - even if it hit them square in the face.
Capitalism ended when the 2008 crises hit the global financial system.
We currently exist in a financial framework where the rich and the well connected reap the profits when their business is doing well. If they do end up making a loss while taking excessive risks, lending money to those who cannot pay back or pawning risky investments in the form of derivatives to their clients, their friends, the elected politicians are always there to bail them out with tax payers funds and even if that is not sufficient they can always borrow more. The debts taken in the name of the country will have to be borne by the rest of the population in the form of higher taxes and austerity measures.
Welcome to the new age democracy where we privatize the gains and socialize the losses for the elite and well connected.
http://www.marketoracle.co.uk/Article35345.html
"Crime pays" is what I hear more and more people saying....soon you will have "tricklle down crime" as the dirty masses start to flaunt the law and imitate the Upper Classes.
Yep.
Oh god, no. Not crime in the streets.
Obeying laws is for Muppets.
Legal land ain't law.
Any fine paid will amount to less money than JPM annually spends on ink and paper. Any time spent will be at Club Fed and the bad guys will be fined but walk out of Club Fed as Michael Milken did...multi millionaires.
No one wants to force JPM to eliminate The Largest Silver Short in Human History more than I do.
But this thread has deteriorated into a Yahoo Finance thread, not a typical Zero Hedge thread.
And the ThumbsUp/ThumbsDown facility has been tampered with and is not working again.
(Yolanda and HER Nexus needs to be put out to pasture.)
I'll believe we're serious about prosecuting fraud when I see one of these guys in jail and busted broke:
Dimon
Paulson
Blankfein
Pandit
Bernanke
Mozillo
Lay
Gorman
+ Corzine
The leaders of the large financial firms have known for years the SEC and CFTC are a joke. Their busy watching porn or collecting payoffs. There is so much corruption in the government and in the financial system nobody cares about it anymore.
Think u mean Lewis as Lay has been busted and is dead or drinking makers mark on an island somewhere
And it was just a few short weeks ago that Obama advised that "Dimon is one of the best bankers and Wall Street pros out there". How could I have possibly have been so stupid, so wrong to vote for Obama in the last election.
Good point. Under a McCain presidency, Dimon would never have been allowed to take charge of JPM.
Bwahhhh haaahaaaahaaaa.
I remember going into some Fed meetings on Y2K. Some region Fed sales wonk would pull a roll of quarters out of their pocket and ask anyone in the audience if they were worried about Y2K. They would walk up and down the aisles with open questions like this and that until the number of hands went down to the last 2 or 3. Then they would ask one of them to stand up and tell the audience all about their worries. In the end the whole exercise was about publicly disgracing the last man standing and then awarding them the roll of quarters, just to make the point that the winner was in a fact a loser - a loser who lost faith in the banking system.
That is what the Fed and the banks is about - confidence. That old vestigial member from the First Great Depression.
EVERY DAY there is another story about banks doing this and that and the so called government is silent. Nothing.
I want to hear the righteous indignation of a retired Fed about all the unchecked criminality of these Last Days.
Until these bankers hang at the end of a rope there will be no hope!
This is getting to be like mining in a horse corral--it's a very old corral too-and deep. Get out the guns. Milestones
Ina did it!
By far and away, this has been one of the best bedtime ZH reports I've ever read. I can't wait to wake up tomorrow!
MarkIt Zero next frame.
Twaingg.
Where did all the vigilantes go? Is it time to bust out the guillotine again to cleanse the planet of the banker pestilence?
Jesus drove the money changers out of the temple but he died ages ago.. Anyone care to step up to the plate
for an at bat.. ?? Or how about a celebrity banker roast with Mr. Diamond and Mr Dimon ( among others) as featured
items on the grill???
And this is why I love ZH. They always have the goods. Reading ZH is like looking into the future, which is a very nice superpower to have these days.
So JPM fesses up the day of earnings, but doesn't restate those earnings reflecting proper CDS pricing. Why not? A huge loss ahead. And while we're at it, has anyone asked whether the interest swap traders were doing the same thing? What's 5 basis points on $25 trillion? About a $2million bonus to me. Ain't capitalism great!
Hilarious b/c dimon is a foul mouth punk that will do whatever it takes to 'win'. all else remaining the same: he is a gangster.
Thank God this sort of thing is limited to only the banking industry!
Stupid question but why are these financial firms suddenly admitting foul play? For years it was kept under wraps apart from Zerohedge exposing the fraud but now it's almost like they WANT to collapse the system. I'm wondering if this is the game plan and they are using the banks as a tool to crash the system and then bring in the global currency and end the cash based system.
Our Defining Moment
http://shutupnsing.wordpress.com/2012/07/17/precious-time/
Bah,
Lots of sound and fury for the news cycle,then nothing. Next year they pay a fine (bribe) to CFTC, no admission of guilt and tort lawyers won't have a case.
Then, on to the next manipulation scandle.
No big deal. Business as usual.
Wow. When I first read the article, I was really worried that something catastrophic might happen tomorrow.
But after reading all the comments, I'm reassured that nothing will change.
I'm just going to turn in and get some extra rest, for my double shift tomorrow at McDonalds.