Front Office Trading: I Want to See the Positions!

Abstract

J.P. Morgan Chase & Co. Chairman and Chief Executive Officer James Dimon faced many crucial management decisions based on the revelation during his April 30, 2012 conference with his senior management team about certain out-of-control trading positions created by trader Bruno Iksil. Mr. Iksil’s trading positions were not being monitored by the internal control system. The initial estimate of losses on those trading positions was at least $2 billion but later escalated to at least $6 billion. Mr. Dimon was frantic. He knew that he and his senior management team must analyze the facts surrounding the loss positions and disclose and characterize those facts in a way that would cause the least damage to the bank’s reputation and his personal reputation.