The Federal Bureau of Investigation is reviewing taped phone conversations to build criminal cases related to the multibillion-dollar trading loss at JPMorgan Chase revealed earlier this year, according to a report in the New York Times.
In mid-May, the bank announced it had sustained a huge loss that originated in its London office due to a failed hedging strategy undertaken by Bruno Iksil, nicknamed “The London Whale” because of the size of the trading positions he took.
So far, JPMorgan has estimated its total trading loss from the bad trades at $5.8 billion.
Investigators are looking into the actions of four people who previously worked for the team based in London responsible for the losses at the bank, the Times said.
The probe is focused on telephone calls in which JPMorgan employees openly discussed how to value the troubled bets in a favorable way, the report said.
The phone recordings were handed over to officials by the bank. Investigators are also looking at notes that employees took during staff meetings, instant messages circulated among traders and e-mails sent within the group, the paper reported.
Authorities are looking at how traders in the chief investment office altered market prices as their investments began to go against them. They are also probing whether records were falsified to hide any issues from executives in New York, the Times said. Using those records, JPMorgan submitted erroneous financial statements to regulators, another area of focus for investigators.
The FBI could make some arrests related to the case in the next several months, the paper reported.
JPMorgan’s Chief Executive Jamie Dimon, who faced questions from lawmakers in June over the losses at the bank’s London office, said Wednesday that the bank made “a stupid error” by allowing the a derivatives trader to saddle the bank with a multibillion-dollar loss.
“I should have caught it ... I didn’t,” he said in an interview in Washington at the Council on Foreign Relations.
Reuters contributed to this report.
