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

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reporting. All of those positions are put on pursuant to the risk management at the
firm-wide level.
The last comment I would make is that ... we believe all of this is consistent with
what we believe the ultimate outcome will be related to Volcker.” 1457
Mr. Dimon made the following statements during the April 13, 2012 earnings call about
the SCP in response to a reporter’s question:
“It's a complete tempest in a teapot. Every bank has a major portfolio. In those
portfolios, you make investments that you think are wise, that offset your
exposures. Obviously, it's a big portfolio. We're a large company and we try to
run it. It's sophisticated, well, obviously, a complex thing. But at the end of the
day, that's our job, is to invest that portfolio wisely and intelligently to – over a
long period of time to earn income and to offset other exposures we have.” 1458
After the call, the bank’s internal communications indicate that, of all the issues
discussed on the call, bank personnel focused in particular on gauging the reaction to the bank’s
CIO commentary, likely because the bank’s goal was to reassure the market. Ms. Youngwood
emailed Mr. Dimon and Mr. Braunstein several hours after the call with a summary of calls from
analysts, noting in the first line of her email: “We are now getting calls. Tone positive. No
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questions on CIO.” Later that evening, she emailed them that there were “[v]ery few
questions on CIO” on the “[l]ast batch of calls.” 1460
Three days later, on April 16, the first
trading day after the earnings call of April 13, Julien Grout, one of the SCP traders, emailed two
other SCP traders, Bruno Iksil and Luis Buraya, crediting the April 13 statements for turning the
market around:
“Positive signs start to appear since Jamie and Doug’s comments on Friday: [t]he
market has stopped going against our positions in an aggressive way. We have
not seen the positions trading against us since Apr 10 and we have seen since
Friday encouraging signs …. There is finally selling interest on IG 9 5 Yr,
though not significant to reverse our loss but significant for the first time since the
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beginning of April and specially since our loss on Apr 10.”
In describing the SCP on the earnings call, both Mr. Dimon and Mr. Braunstein omitted
mention of a number of key facts that they declined to share with investors on the call. First,
compared to the prior quarter, the SCP had tripled in size from about $51 billion to $157 billion
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and contained many new credit derivatives. Mr. Dimon, Mr. Braunstein, and other
1457
Id. at 7.
1458
Id. at 10.
1459
4/13/2012 email from Sarah Youngwood, JPMorgan Chase, to Jamie Dimon and Douglas Braunstein, JPMorgan
Chase, “1Q12 calls – Buyside and Sellside comments (3),” JPM-CIO-PSI 0001137 (She also pointed out one
particular analyst’s feedback: “Thought CIO comments were very helpful; no questions the topic.”).
1460
4/13/2012 email from Sarah Youngwood, JPMorgan Chase, to Jamie Dimon and Douglas Braunstein, JPMorgan
Chase, “1Q12 calls – Buyside and Sellside comments (6),” JPM-CIO-PSI 0001200.
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4/16/2012 email from Julien Grout, CIO, to Luis Buraya and Bruno Iksil, CIO, “CIO Core Credit P&L Predict
[16 April]: -$31,405k (dly) -$1,094,241k (ytd),” JPM-CIO-PSI 0017022, at 026.
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“Summary of Positions by Type and Series,” prepared by JPMorgan Chase in response to a Subcommittee
request, JPM-CIO-PSI 0037609. Prior to the April 13 earnings call, Mr. Braunstein had specifically requested and