JPMorgan to spotlight its big botch

— The board of JPMorgan Chase voted Tuesday to release an internal report detailing the bad investment — and the related management reaction — that cost the nation’s largest bank more than $6 billion, according to several people familiar with the matter.

Since announcing the trading losses in May, JPMorgan Chase has worked to move beyond the losses, shuffling senior management, clawing back millions of dollars in compensation from senior executives and commissioning the internal investigation.

The report, longer than 50 pages, is the result of the investigation, led by Mike Cavanagh, JPMorgan’s former chief financial officer.

The losses stemmed from a derivatives investment made by the bank’s chief investment office, which was a little-known unit with offices in London and New York. An aggressive group of company traders in London built a large position that distorted the credit market and prompted $6.2 billion in losses.

Some within the bank were wary of releasing the report, which focuses on lax supervision and risk controls, according to the people who insisted on anonymity because the discussions are not public. One concern was that plaintiff attorneys might seize on the report, the people said.

But Jamie Dimon, the bank’s chief executive, argued that the report should be released. The report is expected to be critical of Douglas Braunstein, formerly the bank’s chief financial officer, for failing to strictly monitor the activities of the traders in London.

Ahead of JPMorgan’s earnings announcement today, the board met to discuss whether to make the report public. Also on the agenda was whether to reduce the bonuses of Dimon and Braunstein. Dimon, these people said, could have his annual payout cut by as much as 20 percent.

Among the six largest U.S. banks, Dimon was the highest-paid chief executive, taking home $23.1 million in 2011. That year, his total pay package was made up of stock and option awards along with a $4.5 million cash bonus.

A spokesman for JPMorgan Chase did not immediately return calls for comment.

Business, Pages 23 on 01/16/2013

Upcoming Events