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Regulators digging into JPMorgan loss

Tuesday, May 22, 2012 - 02:14

May 22 - JPMorgan Chase's stock has sunk more than 16 percent since it disclosed a more than $2 billion derivatives trading loss earlier this month, and regulators continue to look for answers as to what happened and when. Bobbi Rebell reports.

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JP Morgan Chase's massive $2 billion plus derivative trading loss once again under the microscope. U.S. Securities and Exchange Commission Chairman Mary Schapiro told a senate banking committee the SEC is investigating the timing and accuracy of the firm's financial reporting. She was questioned by Senator Richard Shelby: SOUNDBITE: MARY SCHAPIRO, CHAIRMAN, U.S. SECURITIES AND EXCHANGE COMMISSION (ENGLISH) SAYING: "Our focus right now is on whether the companies public disclosure and financial reporting is accurate in light of what the press has teed up as what did they know and when did they know it." SOUNDBITE: U.S. SENATOR RICHARD SHELBY, REPUBLICAN, ALABAMA (ENGLISH) SAYING: "Absolutely, and if they knew something, say a month earlier that was going wrong should they have disclosed that to the SEC, the CFTC and is that what you are trying to find out now or do you already know?" SOUNDBITE: MARY SCHAPIRO, CHAIRMAN, U.S. SECURITIES AND EXCHANGE COMMISSION (ENGLISH) SAYING "That is what we are investigating now. Were their earnings release statements and their Q1 financial reports accurate and truthful?" The SEC says it did not have direct oversight of the credit derivatives trades which took place in London, outside of the regulated brokerage. She said that had the final rules required by the 2010 Dodd-Frank oversight law been in place, the SEC would have had a better idea of the trades. She also said banks are required to disclose changes to risk models- addressing reports that JP Morgan quietly changed to its value-at-risk model. That allowed the trading portfolio to appear safer than it was, and resulted in riskier bets. The bank first disclosed the changes when it announced the huge trading loss on May 10th. Gary Gensler heads the U.S. Commodity Futures Trading Commission, which has also opened up a probe of the trading losses. SOUNDBITE: GARY GENSLER, CHAIRMAN, U.S. COMMODITY FUTURES TRADING COMMISSION (ENGLISH) SAYING: "I think it's a good reminder that risks in London can come back here and we can't have the U.S. tax payer stand behind them." More hearings are expected to be held on JP Morgan's trading loss- with CEO Jamie Dimon likely to testify before Congress this summer. Bobbi Rebell, Reuters.

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Regulators digging into JPMorgan loss

Tuesday, May 22, 2012 - 02:14