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

The compensation data for both Mr. Macris and Mr. Martin-Artajo, which shows them
receiving incentive pay worth millions of dollars each year, indicates that their compensation
moved in tandem with and reflected SCP profits, which peaked in 2009 with $1 billion in
revenues, and then diminished in 2010 and 2011. 362 Mr. Iksil’s pay did not follow the same
pattern, however, peaking instead in 2010. All three employees also received positive
performance reviews in those years. 363
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The JPMorgan Task Force Report noted that two of the CIO traders “maintained a strong
focus on daily, monthly and quarterly profit-and-loss numbers, and were acutely concerned about
364
mounting losses in the Synthetic Credit Portfolio.” It also stated that “[t]he Task Force []
found little in the form of direct evidence to reveal what [employees] were thinking about their
own specific compensation as they made decisions with respect to the Synthetic Credit
Portfolio,” 365 But at least one of the traders contemplated what would occur after the SCP
suffered large losses. In a March 23, 2012 email, after a day of large losses, Bruno Iksil wrote:
“I am going to be hauled over the coals. … [Y]ou don’t lose 500 M[illion] without
consequences.” 366
The JPMorgan Task Force explained in its report that the CIO did not have its own
incentive compensation system, but participated in a bankwide annual incentive compensation
plan overseen by the Compensation and Management Development Committee of JPMorgan’s
367
Board of Directors. It stated: “Awards under the plan are discretionary and non-formulaic,
and compensation is dependent on multiple factors that can be adjusted and modified depending
on the particular circumstances.” 368
According to internal bank documents, the three SCP employees were among the most
highly-paid employees in the bank, and their compensation was reviewed by the bank’s
369
Operating Committee and approved by CEO Jamie Dimon. In developing the total
compensation amounts to be paid to each employee, the bank established a “reference group” for
each individual based upon internal and external benchmark positions. The reference group
used for the SCP employees consisted primarily of Investment Bank employees in positions that
were profit-oriented, rather than risk management-based. For Mr. Macris, his compensation
exceeded the salary range for his reference group in both 2010 and 2011 (the only years
available); Mr. Martin-Artajo’s compensation exceeded his reference group in 2011 and was at
the top end of the range in 2010; and Mr. Iksil was at the top end of the range for 2011 (the only
year available). 370
This data indicates that, not only were the SCP employees compensated like
Investment Bank employees, but they were compensated at levels that were at the top range of,
or better than, the best Investment Bank employees.
362
See 6/21/2012 CIO Compensation Presentation, JPM-CIO-PSI-H 0002746, at 754. See also “CIO Compensation
– Revenue to Compensation Historical Lookback,” JPM-CIO-PSI-H 0002749.
363
6/21/2012 CIO Compensation Presentation, JPM-CIO-PSI-H 0002746, at 757-760; 766-770; 772-781.
364
2013 JPMorgan Chase Task Force Report, at 92.
365
Id. at 92.
366
3/23/2012 instant messaging session between Bruno Iksil and Julien Grout, CIO, JPM-CIO 0003515-541.
367
2013 JPMorgan Chase Task Force Report, at 92.
368
Id.
369
6/21/2012 CIO Compensation Presentation, JPM-CIO-PSI-H 0002746, at 750.
370
Id. at 754.