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

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(2) Failing to Provide OCC with CIO Data
The CIO managed $350 billion in excess deposits, a portfolio whose size was second
only to that managed by the Investment Bank within JPMorgan Chase. To keep apprised of CIO
activity, the OCC required the bank to share a number of standard internal reports tracking the
CIO’s asset, risk, and profit/loss data. In early 2012, however, the bank’s standard reports began
to omit critical CIO data. Those data gaps meant the OCC did not have comprehensive or up-todate
information about the CIO’s trading activities, including with respect to the SCP.
Executive Management Reports. One of the regular reports the bank supplied to the
OCC was a monthly Treasury Executive Management Report (EMR), which included a section
with basic performance data for the CIO. According to the OCC, over time, those reports
became thinner and thinner with less useful information about the CIO. 1295 The OCC told the
Subcommittee that it approached JPMorgan Chase’s Chief Financial Officer, Douglas
Braunstein, as well as the bank’s Corporate Treasury division about the lack of sufficient
information in the EMR. 1296 The OCC explained that it was concerned because “less
information mean[t] less questions” that regulators could pose. 1297 Then, in January 2012, the
OCC noted that the usual monthly Treasury EMR did not include any section on the CIO, as it
had in the past. The OCC said it later learned that, without any notice to the agency, the CIO had
begun issuing its own Executive Management Report (EMR). 1298 The OCC said that the CIO
did not provide the OCC with copies of the CIO’s new EMR in January, February, March, or
April, the same four-month period during which the SCP losses exploded. 1299 When the OCC
finally learned of and requested a copy of the CIO’s monthly EMR report in April, after the
London whale stories appeared in the press, 1300 it promptly received a copy. 1301
It is difficult to
understand how the bank could have failed to provide, and the OCC failed to request, basic CIO
performance data for a four month period.
Valuation Control Group Reports. A second type of report that the bank routinely
provided to the OCC was the CIO’s Valuation Control Group (VCG) reports, which were
monthly reports containing verified valuations of its portfolio assets. The OCC used these
reports to track the performance of the CIO investment portfolios. But in 2012, the OCC told the
1302
Subcommittee that the CIO VCG reports for February and March failed to arrive. These are
the same months during which it was later discovered that the CIO had mismarked the SCP book
to hide the extent of its losses. 1303 On April 13, 2012, after the London whale trades appeared in
the press, the OCC requested copies of the missing VCG reports, which were provided on the
same day. 1304
Again, it is difficult to understand how the bank could have failed to provide those
1295
Subcommittee interview of Fred Crumlish, OCC (8/28/2012).
1296
Id.
1297
Id.
1298
4/19/2012 email from John Wilmot, CIO, to James Hohl, OCC, “CIO EMR?,” OCC-00004723.
1299
4/19/2012 email from James Hohl, OCC, to Geralynn Batista, OCC, “CIO portfolio,” OCC-SPI-00021700.
1300
4/13/2012 email from Thomas Fursa, OCC, to James Hohl, OCC, “CIO Deck,” OCC-00004720.
1301
Subcommittee interview of Fred Crumlish, OCC (8/28/2012).
1302
4/13/2012 email from John Bellando, JPMorgan Chase, to James Hohl, OCC, “CIO January 2012 valuation
memo and metri[c]s,” OCC-00004735; Subcommittee interview of James Hohl, OCC (9/5/2012).
1303
For more information about the mismarking that took place during these months, see Chapter 4.
1304
4/13/2012 email from John Bellando, JPMorgan Chase, to James Hohl, OCC, “CIO January 2012 valuation
memo and metri[c]s,” OCC-00004735.