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

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risk personnel criticized the OCC’s findings and recommendations, 1256 and the meeting assumed
a loud and “combative” tone. 1257 The OCC examiner recalled that Peter Weiland, the CIO’s
Chief Market Risk Officer, agreed with the OCC’s suggestion on one point, which had the effect
of quieting the executives in the room, but said it was the only issue on which anyone from the
bank supported an OCC recommendation from that examination. 1258 After the meeting ended,
he said that, despite the bank’s aggressive response, the OCC issued its Supervisory Letter
largely in line with the original conclusions the examiner had presented. 1259
Still another instance involved profit and loss reports. In either late January or early
February 2012, the OCC said that the daily Investment Bank P&L report stopped arriving in
OCC electronic inboxes. The OCC explained that when it brought up what it thought was
simply a glitch in JPMorgan Chase’s email delivery, the bank informed it that Chief Executive
Officer Jamie Dimon had ordered the bank to cease providing the Investment Bank’s daily P&L
1260
reports, because he believed it was too much information to provide to the OCC. The OCC
said that the bank explained further that it had experienced a series of unauthorized data
disclosures and the bank, not knowing who was leaking the data, sought to limit the information
it provided to the OCC, even though OCC had not been responsible for the leaks. 1261 According
to the OCC, when it requested resumption of the daily Investment Bank P&L reports, Douglas
Braunstein, JPMorgan Chase’s Chief Financial Officer, agreed to the request, but had apparently
not informed Mr. Dimon. At a meeting shortly thereafter in which both Mr. Braunstein and Mr.
Dimon were present, according to the OCC, when Mr. Braunstein stated that he had ordered
resumption of the reports, Mr. Dimon reportedly raised his voice in anger at Mr. Braunstein. 1262
The OCC said that Mr. Dimon then disclosed that he was the one who had ordered a halt to the
reports and expressed the opinion that the OCC did not need the daily P&L figures for the
Investment Bank. 1263
The OCC estimated that it was without the reports for less than a week
altogether.
(3) 2011: Missing SCP Red Flags
In 2011, the SCP expanded dramatically, acquired a complex mix of credit derivatives,
and bankrolled a high risk series of credit trades that produced substantial unexpected revenues.
Along the way, several red flags highlighted risks associated with the growing SCP, which
should have caught the OCC’s attention and led to a regulatory inquiry into the CIO’s growing
synthetic credit trading, but the OCC missed those red flags.
In 2011, the SCP expanded tenfold in size, from about $4 billion in notional positions at
the beginning of the year to $51 billion at the end of the year. 1264
As explained earlier, it
1256 Id.
1257
Id.
1258
Id.
1259
See 3/9/2012 OCC Supervisory Letter JPM-2012-09 to JPMorgan Chase, “Examination of FSI Stress Testing
Framework”; Subcommittee interview of Jaymin Berg, OCC (8/31/2012).
1260
Subcommittee interview of Scott Waterhouse, OCC (9/17/2012).
1261
Id.
1262
Id.
1263
Id.
1264
See “Summary of Positions by Type,” prepared by JPMorgan Chase in response to a Subcommittee request,
JPM-CIO-PSI 0037609.