JPMORGAN CHASE WHALE TRADES: A CASE HISTORY OF DERIVATIVES RISKS AND ABUSES

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Mr. Pinto: “Ok. And you think that the fact that we marked the book that way, so we
are benefitting with that amount and you are having a loss of that amount?”
Mr. Martin-Artajo: “Well, I, I just, I’m just concerned that the bid/offer spread is wide,
and I don’t know where the, the, the prices are when we trade. That’s basically what it is,
really.”
Mr. Pinto: “Ok, so then, then, I think that we need to get Jean Francois 735
to take a look
of the marks and see if there is anything that is being done inappropriate. What I was
telling Achilles is that we haven’t … had recently, any substantial … discrepancies in the
valuations with clients, or any market disputes.”
Mr. Martin-Artajo: “Ok.”
Mr. Pinto: “So, if we would have something of that nature, we would have substantial
market disputes. But in any case, so I’ll take a look and then we’ll take it from there. …
Mr. Pinto: “But, but, yeah but to think, to think, that someone from us … went and
openly in the market, talked about your positions? Really? I would be extremely
surprised.”
Mr. Macris: “Ok.”
Mr. Pinto: “That the market knows that, what your positions are? That may be, because
you bought tons of it.”
Mr. Macris: “Yeah.” 736
According to JPMorgan Chase, the Investment Bank reviewed its books, determined it
had not traded in size against the CIO, had correctly marked its positions, and had no material
collateral disputes indicating a problem with its marks. 737 Mr. Pinto’s logic in identifying
collateral disputes as a red flag of mismarking shows that the bank itself should have focused on
the CIO’s growing collateral disputes in March and April as evidence of a mismarking problem.
JPMorgan Chase also told the Subcommittee “there was no evidence that the Investment Bank
was leaking” information about the CIO’s positions to the market at large. 738
Instead, as Mr.
Pinto pointed out and as Mr. Macris admitted, the market’s awareness of the CIO’s positions was
attributable to the CIO’s voluminous trading.
735
Jean Francois Bessin was the director and global head of valuation for the Investment Bank.
736
3/23/2012 Subcommittee transcription of recorded telephone conversation between Achilles Macris, Javier
Martin-Artajo, CIO, and Daniel Pinto, Investment Bank, JPM-CIO-PSI-A 0000140.
737
Subcommittee interview of John Hogan and Ashley Bacon, JPMorgan Chase (9/4/2012).
738
Id. (noting that that the bank’s compliance group had come to that conclusion, which Mr. Martin-Artajo
accepted).