JPMorgan Chase revises profit down
Financial results at JPMorgan Chase were lowered in the wake of the “London Whale” scandal. Above, CEO Jamie Dimon. (June 13, 2012) Credit: AP
JPMorgan Chase Thursday formally revised its first-quarter financial results to show a lower profit, after deciding that traders at its main investment arm had overstated the value of certain derivatives.
The reduction followed the bank's internal investigation into the nearly $6 billion in trading losses revealed in recent months.
JPMorgan reiterated that it had discovered that some traders may have tried to conceal the size of losses from a soured bet. The "London Whale" trades involved complicated hedging strategies intended to reduce the bank's risk, but actually increased it when they backfired.
In a regulatory filing, the New York bank said the probe found information that "suggested that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred." As it revealed last month, the bank now says that it earned $4.92 billion for the quarter ended March 31. That's $459 million less than the $5.38 billion originally reported.
On a per-share basis, the results came to $1.19, versus the $1.31 originally reported.
JPMorgan's regulators, the Federal Reserve and the Office of the Comptroller of the Currency, told the bank to restate a measure of capital strength that it had previously published for the first and second quarters. In its filing, the bank revised the measure downward for the two quarters to reflect additional risk from the trading loss.
The huge loss has embarrassed JPMorgan, which made it through the financial crisis with a reputation for taking less risk with its customers' money than other major banks. Chief executive Jamie Dimon has been called before Congress to explain the debacle, and the Justice Department, the Securities and Exchange Commission and other regulators, including one in Britain, are looking into the loss.
The bank may still face civil fraud charges stemming from filing its original financial statements. If regulators decide that employee deceptions caused JPMorgan to report inaccurate financial details, they could pursue charges against the employees, the bank or both.
'No one wants to pay more taxes than they need to' Nearly 20,000 Long Islanders work in town and city government. A Newsday investigation found a growing number of them are making more than $200,000 a year. NewsdayTV's Andrew Ehinger reports.
'No one wants to pay more taxes than they need to' Nearly 20,000 Long Islanders work in town and city government. A Newsday investigation found a growing number of them are making more than $200,000 a year. NewsdayTV's Andrew Ehinger reports.
