JP Morgan Slammed In 'London Whale' Report

A US Senate report has slammed investment bank JP Morgan over the conduct of its so-called London Whale trader, who lost the company more than $6.2bn (£4bn).

The official report said JP Morgan Chase & Co ignored risks, misled investors, fought with regulators and tried to work around rules as it dealt with mushrooming losses in a derivatives portfolio.

The Senate report painted a damning review of the largest US bank's management.

Senior managers at the firm were told for months about the bad derivatives bets that ended up costing the bank more than $6.2bn but did little to rein them in, according to the Permanent Subcommittee on Investigations report.

The Senate report came on the same day the US Federal Reserve separately asked JP Morgan to improve its capital planning process as part of an annual "stress tests" of banks.

The barrage of bad news for JP Morgan, long seen as the safest and best-managed US bank, could taint the reputation of the bank.

Chief executive Jamie Dimon has been one of the most outspoken critics of Washington's attempts to tightly regulate Wall Street after the 2007-2009 financial crisis.

The report gives ammunition to supporters calling for stricter financial reform regulations.

In particular, the 301-page Senate report will likely give new energy to regulators crafting the Volcker rule, which proposes to put limits on banks betting with their own funds.

Bank boss Jamie Dimon has opposed increased regulation

A JP Morgan spokeswoman said: "While we have repeatedly acknowledged mistakes, our senior management acted in good faith and never had any intent to mislead anyone."

Although committee sources said the trading losses appeared to be more than $6.2bn, investigators could not determine how much exactly, as those made by the bank's chief investment office were moved to other parts of the bank.

Sources said JP Morgan declined to provide them more information about the values of the positions.

The Senate subcommittee will hear directly from senior JP Morgan executives - but not from Mr Dimon - at a hearing on the derivatives bets.

They came to be known as the London Whale trades due to the size of the transactions.

The trader responsible for the loss-making position, Bruno Iksil, subsequently lost his job.

Senator Carl Levin, who chairs the subcommittee, said he had not yet decided whether to refer the report to criminal or civil authorities.

He said the panel could hold further hearings and may still call Mr Dimon to the hearing.

The Wall Street Journal has published a list of witnesses giving evidence to the Senate committee.

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