J.P. Morgan's $2 Billion Blunder [WSJ]
A massive trading bet boomeranged on J.P. Morgan Chase JPM +0.25% & Co., leaving the bank with at least $2 billion in trading losses and its chief executive, James Dimon, with a rare black eye following a long run as what some called the "King of Wall Street." The losses stemmed from wagers gone wrong in the bank's Chief Investment Office, which manages risk for the New York company. The Wall Street Journal reported early last month that large positions taken in that office by a trader nicknamed "the London whale" had roiled a sector of the debt markets. The bank, betting on a continued economic recovery with a complex web of trades tied to the values of corporate bonds, was hit hard when prices moved against it starting last month, causing losses in many of its derivatives positions. The losses occurred while J.P. Morgan tried to scale back that trade. The bank's strategy was "flawed, complex, poorly reviewed, poorly executed and poorly monitored," Mr. Dimon said Thursday in a hastily arranged conference call with analysts and investors after the stock-market close. He called the mistake "egregious, self-inflicted," and said: "We will admit it, we will fix it and move on," he said.
China and the world's largest audit firms face credibility risks under an order Beijing issued saying the firms must hire more Chinese citizens to manage operations there, analysts said. Thursday's order follows a string of accounting scandals at Chinese companies listed on U.S. stock markets and amid broader questions about China's willingness and ability to conform with international business standards and rules. As the world's second largest economy, China has enterprises with global ambitions, but markets often question the accountability and transparency of these businesses. The new government order will do little to alleviate that skepticism.
Why Is The SEC Pursuing Deloitte Shanghai? Looks Like It’s Personal [Re:The Auditors]
Francine McKenna suspects a pissing match: "The Securities and Exchange Commission is rattling a dull sabre again towards Shanghai-based Deloitte Touche Tohmatsu CPA Ltd. for its refusal to provide the agency with audit work papers related to Longtop, a China-based company under investigation for potential accounting fraud against U.S. investors. The regulator filed an “enforcement action” instituting an “administrative proceeding” yesterday. […] This has been going on now for two years and seems to have escalated into the kind of fight men have when trying to prove who’s bigger and tougher. It looks to me like it’s personal rather than productive. The SEC has access to as much as they need to review the work of the Deloitte China firm’s audit of Longtop – or any other Chinese fraud for a US listed company – assuming the US Deloitte firm had as much as they needed to sign off on the companies’ filings with the SEC over the years."
Yahoo‘s embattled chief executive, Scott Thompson, told the company’s senior management on Thursday that he never submitted a résumé or falsified his academic credentials, a person briefed on the matter said.
Howard Gleckman imagines the conversation.