• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

JPM Hires Ex-SEC Chief Enforcement Officer To Help Prop Trading Loss Damage Control

Tyler Durden's picture


For anyone who had doubts that the JPM CIO debacle was only just starting, the just broken news by Bloomberg that the firm has hired former SEC enforcement chief William McLucas "to help respond to regulatory probes of the firm’s $2 billion trading loss" should put all doubts to rest. Because the last thing JPM needs now is to be perceived as engaging in even more regulatory capture (its current general counsel was also previously a head of enforcement at the SEC) . Yet because it is doing precisely this, means that the offsetting cost, namely the fallout that will be associated with the CIO unwind if and when completed (and we will know for sure when the Q2 earnings are released at the latest), will be fast and furious.

From Bloomberg:

The lender’s May 10 announcement of the “self-inflicted” loss spurred reviews by the SEC, Commodity Futures Trading Commission, Office of the Comptroller of the Currency and Federal Bureau of Investigation. JPMorgan has said the losses may increase. Kristin Lemkau, a company spokeswoman, didn’t have an immediate comment on the hiring. The people requested anonymity because the appointment hasn’t been made public.


Investigators may focus on how JPMorgan disclosed the risk of losses, SEC Chairman Mary Schapiro said today in congressional testimony. The agency is studying the veracity of JPMorgan’s first-quarter reports, she said.


McLucas, a Washington-based partner at law firm Wilmer Cutler Pickering Hale & Dorr LLP, led the SEC’s enforcement division from 1989 to 1998. He represented board committees in the collapses of Enron Corp. and WorldCom Inc. McLucas, 61, didn’t reply to a phone call and e-mail seeking comment.

McLucas is not Dimon's first foray into reg capture:

JPMorgan’s general counsel and most senior lawyer, Stephen Cutler, also previously served as the head of enforcement at the SEC. Cutler, 50, worked with McLucas at Wilmer from 2005 to 2007, before being hired by JPMorgan.

So... Time to revisit that stress test analysis Zero Hedge broke yesterday which caps the CIO loss at about $31.5 billion?

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Tue, 05/22/2012 - 13:59 | 2451708 Ahmeexnal
Ahmeexnal's picture

JPig is going down.
Time to short their crappy stock.

Tue, 05/22/2012 - 14:03 | 2451720 Silvergood
Silvergood's picture

Time to buy more physical GOLD and SILVER.

Tue, 05/22/2012 - 14:19 | 2451781 nope-1004
nope-1004's picture

Entire financial system is a scam.  BofA is a dead bank walking, JPM no better.  They're all crippled beyond belief, yet Benocide feels the need to keep this ponzi farce going, probably because of political pressure.


Tue, 05/22/2012 - 14:47 | 2451936 chdwlch1
chdwlch1's picture

Isn't that PAGE (Pan Asian Gold Exchange) set to go next month?  Didn't the US Treasury just announce that China is now the only foreign govt. that has direct access to buy (not sell...yeah, right) US Treasuries?  The Euro is on death's door and now all of these problems with JPM derivatives coming to the forefront? Can't tie it all together yet, but something big seems to be afoot. Is the dollar's reign as the world's reserve currency closer to the end than anyone of us realizes? Something wicked this way comes...

Tue, 05/22/2012 - 19:33 | 2453284 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The ex-chief might show them how to surf porn better. Lie in a more palatable manner.

Tue, 05/22/2012 - 14:14 | 2451784 malikai
malikai's picture

Oh, those windows sure do look nice over there at the Morgue, now don't they?

Tue, 05/22/2012 - 14:16 | 2451798 vast-dom
vast-dom's picture

so if we are in the BLACK SWAN event since 2008, we may infer this is the swan droppings event.

Tue, 05/22/2012 - 14:33 | 2451860 The Big Ching-aso
The Big Ching-aso's picture



To help sustain my faith in sound regulated banking, someone anyone please tell me there isn't a conflict of interest here.

Tue, 05/22/2012 - 14:37 | 2451900 vast-dom
vast-dom's picture

the system is predicated on justifying the conflict of interest -- it's all vs the 99% destroy....

Tue, 05/22/2012 - 14:40 | 2451916 The Big Ching-aso
The Big Ching-aso's picture



Thanks.   I feel better now.

Tue, 05/22/2012 - 17:19 | 2452848 A Nanny Moose
A Nanny Moose's picture

These are not the droids you are looking for.

Tue, 05/22/2012 - 14:53 | 2451990 Carl Spackler
Carl Spackler's picture

Fascinating concept, my dear vast-dom (er, "Watson").

These types of things (i.e., what are supposed to be construed as "long-tail" risk events) are happening so frequently these days, that many questions are caling for fresh answers, such as:

- Who is going to clean up all of these swan droppings?

- When does a REAL black swan event look like and how bad is that going to be?

- Who's going to make the popcorn, while we sit back and observe?


Tue, 05/22/2012 - 14:23 | 2451832 WillyGroper
WillyGroper's picture

I'd love to think they'd let this MF burn. It'll NEVER happen. 


Tue, 05/22/2012 - 14:43 | 2451931 Steel_Preacher
Tue, 05/22/2012 - 14:02 | 2451718 ArrestBobRubin
ArrestBobRubin's picture

Now THIS is what you call your "brilliant risk management" :-)

Tue, 05/22/2012 - 14:04 | 2451721 Kreditanstalt
Kreditanstalt's picture

Facebook $32.00...$32.01...$32.00...$32.01...$32.00...$32.01 do we have a new artificial floor? :)

Tue, 05/22/2012 - 14:05 | 2451734 HardwoodAg
HardwoodAg's picture

Very tough to take out $0.00

Tue, 05/22/2012 - 14:03 | 2451725 DrewJackson
DrewJackson's picture

Probably would have been cheaper just to hire Michelle Obama.

Tue, 05/22/2012 - 14:15 | 2451792 ArrestBobRubin
ArrestBobRubin's picture

as the vacation planner

Tue, 05/22/2012 - 14:04 | 2451727 HardwoodAg
HardwoodAg's picture

My thinking is the final tally will exceed the 3% prop limit in DF. Wood explain the buy-back cancelation also. YMMV

Tue, 05/22/2012 - 14:04 | 2451728 ziggy59
ziggy59's picture

Hope everyone has their scuba equipment on... Shits going to get deep..

Tue, 05/22/2012 - 14:05 | 2451731 THECOMINGDEPRESSION

Allow me to fix that heading:

JPM Hires CRIMINAL Chief Enforcement Officer To HIDE Fraudulent Trading Losses
Tue, 05/22/2012 - 14:08 | 2451750 ArrestBobRubin
ArrestBobRubin's picture

Time to dig into Mr. Vassal McLucas, how he's connected, and who owns his monkey ass...

Tue, 05/22/2012 - 14:10 | 2451742 willien1derland
willien1derland's picture

Must admit I agree with Dimon - I would do ANYTHING in my power not to be taken down by Gensler & Shapiro - I mean EVERYONE on the Street has skirted by these two YoYos, the mighty Jamie Dimon would never let lamo Gensler & Mary 'I will take any bribe' Shapiro prosecute him - it would be the ultimate embarrassment - - I mean think about Harry @ the Exchange on Friday evening -'Jamie Dimon was prosecuted by GENSLER?!' - never happen - Long live the kleptocracy - Putin himself would be proud - I would also recommend hiring Corzine....obviously he can coach Jamie to say 'I have no idea where the money went' in several varied ways

Tue, 05/22/2012 - 14:12 | 2451773 ArrestBobRubin
ArrestBobRubin's picture

Putin? Wtf did HE do? You were 99% home and then the wheels came off

Tue, 05/22/2012 - 14:17 | 2451806 i_call_you_my_base
i_call_you_my_base's picture

never happen - Long live the kleptocracy - Putin himself would be proud

kleptocracy - Putin

kleptocracy = Putin

Tue, 05/22/2012 - 14:08 | 2451748 fuu
fuu's picture

Blood in the water.

Tue, 05/22/2012 - 14:09 | 2451754 Pancho Villa
Pancho Villa's picture

Talk about blatant corruption! By hiring the former SEC enforcement chief (probably for an ungodly amount of money), JPM is sending a message to the current SEC enforcement chief: "Go easy on us now and in a few years when you retire from the SEC we will create a lucrative consulting job for you." The fact that they would go to such lengths must mean they are in serious trouble.

If anyone in Congress cared about honest government (which is actually the last thing that they want), it would be illegal for former regulators to accept any money from companies they formerly regulated.

Tue, 05/22/2012 - 15:49 | 2452425 worbsid
worbsid's picture

And Pentagon Generals to be hired by any company they bought from ... LOL

Tue, 05/22/2012 - 14:10 | 2451757 vincent
vincent's picture



THE MORGUE is on fire.....

Tue, 05/22/2012 - 14:19 | 2451815 Global Hunter
Global Hunter's picture

let the mothafucker burn

Tue, 05/22/2012 - 14:12 | 2451769 Amish Hacker
Amish Hacker's picture

William McLucas has always worked for JPM, they're just moving his desk.

Tue, 05/22/2012 - 14:47 | 2451943 Global Hunter
Global Hunter's picture

YOU are on fire today

Tue, 05/22/2012 - 14:13 | 2451778 loveyajimbo
loveyajimbo's picture

Hell, Gensler and Shapiro are already on the payroll... no doubt.  And don't look for Eric Holder, he is living in sin with Lloyd (The 'Roid) Blankfein, learning the Talmud between hummers...

Tue, 05/22/2012 - 14:13 | 2451782 jrpuffnstuff
jrpuffnstuff's picture

I hope they blocked his ability to access porn during normal business hours.  That's the only way the guy will actually do something.  I suppose they could give him access to ladyboy porn sites after hours as a reward. 

Tue, 05/22/2012 - 14:19 | 2451816 Scalaris
Scalaris's picture


A very apropos career move from McLucas.

Next stop, the White House.


Tue, 05/22/2012 - 14:22 | 2451828 midgetrannyporn
midgetrannyporn's picture


Tue, 05/22/2012 - 14:28 | 2451858 LongSoupLine
LongSoupLine's picture

But, but Goldman "upgraded" JPM this morning...

Oh, wait. I forgot that just supports they're fucked.

Tue, 05/22/2012 - 14:30 | 2451864 PontifexMaximus
PontifexMaximus's picture

This is a perfect move, couldn't be better. JPM is not ashamed at all. My respect! Probably I would act the same way, if my bonus would be in danger. Nevertheless, I am just wondering, which kind of a hello Mr. McLucas gets, obviously not voice- but rather numberwise.

Tue, 05/22/2012 - 14:33 | 2451873 vincent
vincent's picture

So, perhaps there's some credence to letting ALL of the criminals hang themselves. It would be substantially less expensive.

That is, of course, unless they blow everything up.

Why spend a gazillion of taxpayer money, 13 years investigating ( and diverting "productive" time and manpower) only to get a hung jury, 18 months in club FED, or a fraction of a fine. Meanwhile, the rest of the pack just picks up the ball and continues running the con, all while we watch the shitshow on CSPAN or TRU TV.

Starting to make much more sense than expecting the DC gang (all of them) to represent us.

Disclosure: I'm long all of the staples.

Tue, 05/22/2012 - 14:36 | 2451896 The Big Ching-aso
The Big Ching-aso's picture



"Here's your bonus, Mr. McLucas."

"Already?   I just got here."

"Well, at JPM we give bonuses out before performance becomes an evaluation factor."

"Wow.  Just like at the SEC."

Tue, 05/22/2012 - 14:36 | 2451891 Rastamon
Rastamon's picture

#13. Rampant cronyism and corruption

Those in business circles and close to the power elite often used their position to enrich themselves. This corruption worked both ways; the power elite would receive financial gifts and property from the economic elite, who in turn would gain the benefit of government favoritism. Members of the power elite were in a position to obtain vast wealth from other sources as well: for example, by stealing national resources.

With the national security apparatus under control and the media muzzled, this corruption was largely unconstrained and not well understood by the general population.

Fourteen Defining Characteristics Of Fascism

Tue, 05/22/2012 - 14:37 | 2451901 PontifexMaximus
PontifexMaximus's picture

Btw, mafia, cosa nostra and n'dranghetta, not to forget our Yakuza friends would pay a decent sum, to get the handout, how to do this kind of hiring.

Tue, 05/22/2012 - 14:41 | 2451923 Normalcy Bias
Normalcy Bias's picture

Que Louis Freeh, "Special Investigator" (for when the truth shall not be known) in 3...2...1...

Tue, 05/22/2012 - 14:45 | 2451924 ToNYC
ToNYC's picture

What is the most important use of money? To get out of jail; nothing else makes a bigger difference, so why bust your butt for the stuff if it won't cure the most important requirement?

Turns out that the rest of the math is the multiplier of/by intelligence. No amount of money works unless you do that right. That you don't get for free here.

Tue, 05/22/2012 - 14:47 | 2451945 hustler etiquette
hustler etiquette's picture

Lets entertain the idea that your local Mafia has been adjudicated.  Is it "ok" for the local Mafia to seek the expertise of the local police cheif, sherrifs, deputies?  Whiskey Tango Frank!

Tue, 05/22/2012 - 14:51 | 2451970 q99x2
q99x2's picture

JPM is the Government.

Tue, 05/22/2012 - 15:04 | 2452064 cougar_w
cougar_w's picture

If JPM is allowed to go down then the only reason is because they need to burn a $300B hole in the debt market.

Watch for it. This is how they move money around now.

Tue, 05/22/2012 - 15:37 | 2452332 Ricky Bobby
Ricky Bobby's picture

Mafia + Corrupt Apparatchick = Banana Republic.

RIP America! To believe there could be a land not ruled by arrogant psychopaths.





Wed, 05/23/2012 - 01:04 | 2452993 anonnn
anonnn's picture

Good move JPM to hire ex- Chief Enforcement Officer of SEC, as only the privileged [well connected game-makers] can do. Who else knows better where all the skeletons and cover-ups are hidden. Great source of leverage  to control any investigation.

Recall: Likewise, success of a coup d'etat depends only on who controls any investigation. That's the [new] leader's privilege. Is it not so?

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