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JPMorgan To Clawback Bonuses, Will Announce CIO Loss Just Over $5 Billion

Tyler Durden's picture




 

Many were stunned when Ina Drew left JPM with millions in bonuses a few short days after Jamie Dimon told Senate and Congress those responsible for the multi-billions CIO loss would see compensation clawbacks. They can be unstunned now, following a report from the WSJ that in a few days JPM will announces millions in clawbacks from disgraced CIO executives. As for the final loss on the CIO? Recall what Zero Hedge calculated (not speculated, not surmised, not made up) in the hours literally after the JPM announcement of a $2 billion loss? We said: "Is JPM Staring At Another $3 Billion Loss?" and elaborated that "this is where we find ourselves now - the net notionals remain huge (and implicitly on JPM's shoulders), his lack of selling has left the credit index maybe 20bps rich to where it might trade given its rough correlation with the S&P 500 and this would imply at least $3bn of losses already in addition at fair-value." We were again spot on: from the WSJ: "J.P. Morgan is expected to announce Friday that the trading blunders will cost the company just over $5 billion in the second quarter, in which the bank is expected to show a profit, according to people familiar with the situation." Math: it's fundamental (Ph.D. economists - take note).

From the WSJ:

J.P. Morgan Chase JPM +0.85% & Co. plans to reclaim millions of dollars in stock from executives at the center of the trading blunder that shocked Wall Street and tarnished the reputation of Chief Executive James Dimon.

 

The nation's biggest bank is expected to claw back compensation from individuals including Ina Drew, who ran the company's Chief Investment Office, or CIO, according to people familiar with the bank's plans. Ms. Drew was a top lieutenant of Mr. Dimon's before she resigned this spring following the disclosure of the trading losses.

 

The bank could disclose the plans as early as Friday when it announces earnings, these people said. The clawback amounts were still being determined this week because of the complicated formulas and conditions for imposition, according to one person familiar with the situation.

 

J.P. Morgan's plan is the most prominent instance of a major U.S. bank seeking to recover pay from a high-ranking executive since the financial crisis. Other members of the CIO, including Bruno Iksil, the London-based trader known as the "London whale" for his outsize bets on certain corporate credit indexes, and his bosses Achilles Macris and Javier Martin-Artajo also are expected to face clawbacks, the people said.

As for the loss, which we calculated precisely two months ago, the WSJ says:

J.P. Morgan is expected to announce Friday that the trading blunders will cost the company just over $5 billion in the second quarter, in which the bank is expected to show a profit, according to people familiar with the situation. The company's future losses on the trade are projected to stay below $1 billion, the people said, and could result in profits of that much if the market turns in the company's favor.

 

J.P. Morgan is confident that the losses have been capped because 80% to 90% of the botched bets already have been closed out, these people said. The bank also is expected to report that its internal investigation found that the risk failures were isolated to the CIO unit.

Of course, the final loss is irrelevant, even if it is indeed $5 billion, instead of the NYT's attempt to high ball the number to $9 billion just so JPM can "beat expectations" (as we further expected). The biggest problem is that now that every move by the CIO unit will be under the microscope, the group which single-handedly was responsible for up to 25% of JPM's net income as nothing but a prop trading hedge fund within the bigger firm, will have no choice but to truly hedge exposures, in effect reducing the firm's ROI and ROE. In other words, the $25 billion loss in JPM market cap is actually very low compared to how much future earnings the firm has given up as a result of being caught red-handed.

 

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Tue, 07/10/2012 - 21:42 | 2604378 putaipan
putaipan's picture

lower than whale shit ...

Tue, 07/10/2012 - 21:49 | 2604405 DoChenRollingBearing
DoChenRollingBearing's picture

I wonder if they will GET the clawbacks and what JPM plans on doing with the money...

Meanwhile in Peru:

http://tinyurl.com/6s6zhyl

Tue, 07/10/2012 - 21:50 | 2604411 Earl of Chiswick
Earl of Chiswick's picture
Night editor, (Fixed Term Contract) - Bloomberg - England

http://www.mediauk.com/newspapers/jobs/13999/night-editor

Tue, 07/10/2012 - 22:05 | 2604459 SHEEPFUKKER
SHEEPFUKKER's picture

So let me get this straight......JPM will report a 5 billion dollar loss, yet a profit for the quarter?? And this all on the heels of a dividend increase last quarter along with a clean bill of health in the stress test? 

What the fuck, over. 

Tue, 07/10/2012 - 22:32 | 2604516 nope-1004
nope-1004's picture

 

 

Lie # 1J.P. Morgan is confident that the losses have been capped because 80% to 90% of the botched bets already have been closed out, these people said.

 

Lie #2The bank also is expected to report that its internal investigation found that the risk failures were isolated to the CIO unit.

 

Fucking liars.

 

Wed, 07/11/2012 - 00:42 | 2604936 veyron
veyron's picture

Why isn't dimon's bonus getting clawed back?

Wed, 07/11/2012 - 03:27 | 2605122 jeff montanye
jeff montanye's picture

occurred to me too.  as one of thousands.

Wed, 07/11/2012 - 06:55 | 2605240 GetZeeGold
GetZeeGold's picture

 

 

Any word about the silver losses yet.....just checking.

 

Wed, 07/11/2012 - 06:20 | 2605209 Dugald
Dugald's picture

Will make handy bonus for those at the top....!

Tue, 07/10/2012 - 23:31 | 2604737 Dingleberry
Dingleberry's picture

just think what loss they would post if is wasn't for all the govie and insider theft $$$ they get.

Tue, 07/10/2012 - 21:43 | 2604382 Casual_Observer
Casual_Observer's picture

Thou shalt rape and pillage the Muppets with abandon.

Thou shalt not steal what belongs unto JPM.

Wed, 07/11/2012 - 02:58 | 2605104 Silver Alert
Silver Alert's picture

It's not that they're incompetent. Not even that they lost money. No, the real reason for the clawbacks is revenge: they "tarnished the reputation of Chief Executive James Dimon."

Tue, 07/10/2012 - 21:44 | 2604387 fuu
Tue, 07/10/2012 - 21:44 | 2604389 LetThemEatRand
LetThemEatRand's picture

When they clawback several years' worth off ill-gotten gains I will be impressed.  This will be purely for show and will involve only a portion of recent bonuses, leaving these fucks free to enjoy their lifestyles in perpetuity.

Tue, 07/10/2012 - 22:08 | 2604467 AllWorkedUp
AllWorkedUp's picture

Clawbacks? How about some hot tar and a rope attached to the nearest lampost?

Tue, 07/10/2012 - 22:26 | 2604524 LetThemEatRand
LetThemEatRand's picture

These guys would rather be dead than poor.  Let the punishment fit the crime.

Wed, 07/11/2012 - 00:43 | 2604941 tbd108
tbd108's picture

You forgot the feathers.

Wed, 07/11/2012 - 03:30 | 2605123 jeff montanye
jeff montanye's picture

who can find feathers or the time anymore, really?  so it's just hot tar and the noose then.

Tue, 07/10/2012 - 21:46 | 2604396 vast-dom
vast-dom's picture

i made up a 12B loss. wtf do i know?

Tue, 07/10/2012 - 21:46 | 2604398 Joe Davola
Joe Davola's picture

Great call on the loss amount Tyler, but color me skeptical on this part:

 

...every move by the CIO unit will be under the microscope...

Tue, 07/10/2012 - 21:57 | 2604437 stocktivity
stocktivity's picture

Maybe the CIO Unit will be unable to scam the small investor but you can bet one of the other divisions will find a way.

Tue, 07/10/2012 - 22:44 | 2604581 GoldandSilverTrain
GoldandSilverTrain's picture

Agreed. I highly doubt that will happen, unless that microscope is the size of Texas.

http://www.miningstockvaluator.com

Tue, 07/10/2012 - 21:47 | 2604400 dolph9
dolph9's picture

They'll find a few Indians or Russians from the back rooms to hang in front of the public.

Tue, 07/10/2012 - 21:50 | 2604409 koaj
koaj's picture

boo hoo jamie....show me a rope and a lamp post and ill be impressed with this "clawback"

Tue, 07/10/2012 - 21:51 | 2604415 Mae Kadoodie
Mae Kadoodie's picture

A tempest in a piss pot.

Tue, 07/10/2012 - 21:52 | 2604416 shinola
shinola's picture

Yeah, make 'em give up millions in over-valued future stock options.

 

That'll teach 'em.

 

Then flog them with wet noodles.

 

Make 'em "suffer"

Tue, 07/10/2012 - 21:52 | 2604419 Dr. Engali
Dr. Engali's picture

Wow a loss of 5 billion. Let me see with 200 million from PGF and 1.6 billion from MF Global they are only 3. 2 billion in the hole. Who do they plunder next?

Tue, 07/10/2012 - 22:48 | 2604599 GoldandSilverTrain
GoldandSilverTrain's picture

The banksters/global elites still have the rest of the world left to steal from. The $&!# has just started to hit the fan.

http://www.miningstockvaluator.com

Tue, 07/10/2012 - 21:54 | 2604427 azzhatter
azzhatter's picture

Public executions might get my attention but only if Dimon was the first to get whacked

Tue, 07/10/2012 - 21:55 | 2604430 americanspirit
americanspirit's picture

Ina Drew = Ima Hogg

Skin the bitch alive

Tue, 07/10/2012 - 22:03 | 2604454 tmosley
tmosley's picture

Ima Hogg?

Ura Hogg!

The senior Hogg was the ultimate trolldad.

Tue, 07/10/2012 - 23:26 | 2604724 CrazyCooter
Tue, 07/10/2012 - 21:59 | 2604438 Christoph830
Christoph830's picture

Two things that are appalling to me but is just status quo at this point:

1. Why is this news being leaked just 3 days before JPM reports earnings? It couldn't wait? JPM trying to gain back a little goodwill by appearing to retroactively punish Drew and Iksil? How much are they clawing back? Does it offset the $200MM they stole from PFG?
2. JPM finishes up 0.85% for the day while majority of S&P finishes in the red. Seems like some people front-ran the shit out of this story. I could be wrong but doesn't this have at least a hint of insider trading? Don't tell me this was just a regular short squeeze. This shit is so FUBAR

Tue, 07/10/2012 - 22:28 | 2604529 nope-1004
nope-1004's picture

LOL.  Wall Street IS insider trading.

 

Tue, 07/10/2012 - 22:01 | 2604439 nmewn
nmewn's picture

Yeah, I know how it is.

I told my wife I lost five billion just last week and I thought she was going to kill me...lol.

Scale maybe?

//////////////////

"In other words, the $25 billion loss in JPM market cap is actually very low compared to how much future earnings the firm has given up as a result of being caught red-handed."

Duly noted ;-)

Tue, 07/10/2012 - 22:09 | 2604471 Cognitive Dissonance
Cognitive Dissonance's picture

"It could have been much worse if not for my brilliant management of my earlier thievery mismanagement." - Jamie Dimon

Tue, 07/10/2012 - 22:04 | 2604455 Jim in MN
Jim in MN's picture

It's OK.  JPM made enough money. 

 

They can stop now.

Tue, 07/10/2012 - 22:16 | 2604490 disabledvet
disabledvet's picture

"Jamie Dimon resigns. Bank stocks rise on news. Along with overall market." These clowns are the worst people in the history of Wall Street...and that is INDEED saying something!
http://www.youtube.com/watch?v=SXn2QVipK2o

Tue, 07/10/2012 - 22:17 | 2604491 Seasmoke
Seasmoke's picture

so the loss totals $5 Billion.......Time for JPM to go steal some more farmers money

Tue, 07/10/2012 - 22:19 | 2604498 same old story
same old story's picture

Clawbacks?  So the mob send you a horse head and bankers send you a bunch of lobster claws. Do they also send champaign for a scam well done?

Tue, 07/10/2012 - 22:32 | 2604528 JohnG
JohnG's picture

Yes, with strawberries.  And caviar on blinis.  Served by a $1000 a night "escort."  Coke on the side.

Tue, 07/10/2012 - 22:20 | 2604505 potlatch
potlatch's picture

walmart does Rollbacks.  Everyday.  Everyday Rollbacks.

 

So this clawback business, why u take so long?

 

No wonder Wall Street stinks!  And why us Americans vote with our pocket book and shop at WALMART thank you!

Sounds to me like the free market at work, liberals haha

Tue, 07/10/2012 - 22:21 | 2604510 Cabreado
Cabreado's picture

The Narcissist will never claim responsibility.

The Narcissist will fight to the end to protect nothing but their illusion.

We are infested.
They must be defused.

Defusing the Self-Absorbed in places of Influence and Control is the priority of this society.

It will happen, regardless...
But We need to choose the least painful route.

 

Tue, 07/10/2012 - 22:30 | 2604534 JohnG
JohnG's picture

9mm or .40?

Tue, 07/10/2012 - 22:47 | 2604592 Cabreado
Cabreado's picture

There's a fairly narrow target going on here, and 9mm/.40 are not the weapon of choice.

Perhaps... see "Iceland."

Jacked up, commensurately.

Don't accept your voicelessness.

 

Tue, 07/10/2012 - 23:22 | 2604710 potlatch
potlatch's picture

"guillotine-ready public works"

Tue, 07/10/2012 - 22:27 | 2604525 Downtoolong
Downtoolong's picture

The clawback amounts were still being determined this week

I suggest  $1 billion per year for the next five years. That ought to cover it. It's only fair to spread it out over time to give the perps a chance to plan their tax strategy.

Tue, 07/10/2012 - 22:52 | 2604617 mjk0259
mjk0259's picture

It will be a small amount probably tied up in court and then settle for even less. Not even the worst and most blamed of them will suffer a degradation in lifestyle as a result.

Tue, 07/10/2012 - 23:33 | 2604746 Antifaschistische
Antifaschistische's picture

This news is shallow to me.  

It's like a professional gambling cheat who's been cheating for years, yet when caught, as a punishment, has to pay back the winnings from his very last hand...that's it.   

When this game is really over, and the world realizes who all the cheats are...they'll still be left with giant piles of money.   

Case in point:  http://www.hauteliving.com/2012/06/hamptons-home-on-market-for-65-millio...

 

Tue, 07/10/2012 - 23:38 | 2604757 Sutton
Sutton's picture

"We will next raid the "Segregated Accounts"(hahahahahah) of Pioneer Futures and MBF to fill our coffers." Jamie Dimon

Tue, 07/10/2012 - 23:38 | 2604760 Signs of the end
Signs of the end's picture

The travesty that is called justice in this world does not mean that there will be no justice ever!

Isaiah 15:9 For the waters of Dimon shall be full of blood: for I will bring more upon Dimon, lions upon him that escapeth of Moab, and upon the remnant of the land.

 

James 5:1 Go to now, ye rich men, weep and howl for your miseries that shall come upon youYour riches are corrupted, and your garments are motheaten. Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. 

Remember that scene in Raiders of the Lost Ark at the end of the movie where the 'bad guy' literally melts like wax? The people that the world admires because they are preceived to be rich and powerful are seen by God for who they truly are; murderers and thieves. They will have their day in His court, and boy I would not want to be in their shoes!

 

Wed, 07/11/2012 - 00:13 | 2604859 vincent
vincent's picture

Stock buyback...

Brilliant!!

 

Wed, 07/11/2012 - 00:18 | 2604877 newengland
newengland's picture

The hirelings got too big for their britches. Hit 'em where it hurts: in the pocket. Or jail them.

That is the Western way.

Wed, 07/11/2012 - 00:34 | 2604915 Questan1913
Questan1913's picture

The 5 Billion loss is "in this quarter", and at this point untill proven otherwise is still openended. Keep in mind that we are dealing here with the indefatiguable lying swindle class.   The clawback, so called, is just PR noise to deflect blame and scrutiny from Dimon and the BOD and everyone is falling for it, with the help of the servile liestream media..  Their second objective has been to prevent any disclosure of the fact that the London unit was gambling with "unloaned" Chase depositor funds, to the tune of roughly 250 BILLION dollars.  On that point if you are wondering why there are no jobs being created in America, you now know why.  These hedge fund banks are investing nothing in America.  In this case local US deposits were transferred to a subsidiary unit in a foreign jurisdiction where there is no US oversight whatsoever and gambled in the derivatives markets.  If you have money deposited in one of these monstrosities, and you have even once wondered "what can I do?" upon reading and understanding such stories as this one, I suggest you consider pulling your money  out and re-depositing it in a community bank or credit union. 

Wed, 07/11/2012 - 02:02 | 2605052 robertocarlos
robertocarlos's picture

Buy physical silver and send those bastards to the bottom of the sea.

Wed, 07/11/2012 - 02:22 | 2605075 elwu
elwu's picture

"...at least $3bn of losses already in addition at fair-value." We were again spot on: from the WSJ: "J.P. Morgan is expected to announce Friday that the trading blunders will cost the company just over $5 billion..."

With this logic, you would also have been 'spot on' if you wrote ..."at least $1 of losses already...."

Wed, 07/11/2012 - 04:41 | 2605161 Inthemix96
Inthemix96's picture

Fuck bonuses.  Fuck claw backs.  Jail bitchez, thats where you n me would be if we had done half this shit.

For fucks sake, a kid in the London riots took a case of water over here, and that 'boy' got 6 months.

Take them down, take them all down the filthy thieving fuckers.

Wed, 07/11/2012 - 06:43 | 2605228 Miss Expectations
Miss Expectations's picture

"We use words like honor, code, loyalty. We use these words as the backbone of a life spent defending something."  (Marines)

You use words like trading blunder, botched bets and sloppy paperwork.  You use these words as the backbone of a life spent stealing something.  (Bankers)

Wed, 07/11/2012 - 06:46 | 2605231 Ted Baker
Ted Baker's picture

INCORRECT - THE LOSS STANDS AT MORE THAN 9 BILLIONS...AND THE CLUE IS THERE IN YOUR FACE AS IT SAYS "IN THE SECOND QUARTER" WHAT ABOUT THE OTHER QUARTERS...THIS SALE GUY CALL DIMON MUST GO...

Wed, 07/11/2012 - 07:15 | 2605273 Tom Green Swedish
Tom Green Swedish's picture

JP Morgan is a New York big apple sized pile of crap.

Wed, 07/11/2012 - 07:59 | 2605328 orangegeek
orangegeek's picture

Should be up to 20B in the months to come.

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