Saturday, March 16, 2013

A Trader You Never Heard of Blew Open “London Whale” Disaster

From HuffPo: Julien Grout was nowhere to be seen in the Senate hearing room on Friday. But behind the scenes, this largely unknown figure had much to do with why his former bosses at JPMorgan Chase were sitting there uncomfortably, answering often-hostile questions from lawmakers on how traders lost $6.2 billion on seemingly reckless derivatives trading.

A former bank trader, Grout is party to much of the correspondence and telephone conversations that Senate investigators presented as crucial evidence substantiating a key finding in their report released late Thursday: Top management was directly involved in concealing information that pointed to staggering losses within the London office of a JPMorgan unit known as the Chief Investment Office.

According to the Senate report, Grout frequently raised alarms internally about the size of the positions being staked out by his direct supervisor, Bruno Iskil, the trader whose gargantuan bets earned him the nickname the "London Whale."  Grout also engaged in a practice that many Wall Street denizens would regard as an act of brazen insubordination: He maintained a private spreadsheet tracking the difference between the daily losses the trading unit was reporting to headquarters in New York and what he calculated to be the real losses. …

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