JPMorgan revises down Q1 profit
Source: Agencies |
August 10, 2012, Friday
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Print Edition
Print Edition
JPMORGAN Chase yesterday formally revised its first-quarter financial results to show a lower profit, after deciding traders at its main investment arm had overstated the value of certain derivatives.
The reduction followed the bank's internal investigation into the nearly US$6 billion in trading losses revealed in recent months.
JPMorgan reiterated it had discovered some traders may have tried to conceal the size of losses from a soured bet. The so-called "London Whale" trades involved complicated hedging strategies intended to reduce the bank's risk, but the plan backfired.
In a regulatory filing, the New York bank said the probe found information that "suggested that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred."
As it revealed last month, the bank now says that it earned US$4.92 billion for the quarter ended March 31. That's US$459 million less than the US$5.38 billion originally reported.
On a per share basis, the results came to US$1.19, versus the US$1.31 originally reported.
The bank also admitted to a "material weakness" in its internal controls. It said steps have been taken to address the problems, but noted management is continuing an internal review.
The huge loss has embarrassed JPMorgan, which made it through the financial crisis with a reputation for taking less risk with its customers' money than other major banks. CEO Jamie Dimon has been called before Congress to explain the debacle, and the Justice Department, the Securities and Exchange Commission and other regulators, including one in Britain, are looking into the loss.
The bank may still face civil fraud charges stemming from filing its original financial statements. If regulators decide employee deceptions caused JPMorgan to report inaccurate financial details, they could pursue charges against the employees, the bank or both.
The reduction followed the bank's internal investigation into the nearly US$6 billion in trading losses revealed in recent months.
JPMorgan reiterated it had discovered some traders may have tried to conceal the size of losses from a soured bet. The so-called "London Whale" trades involved complicated hedging strategies intended to reduce the bank's risk, but the plan backfired.
In a regulatory filing, the New York bank said the probe found information that "suggested that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred."
As it revealed last month, the bank now says that it earned US$4.92 billion for the quarter ended March 31. That's US$459 million less than the US$5.38 billion originally reported.
On a per share basis, the results came to US$1.19, versus the US$1.31 originally reported.
The bank also admitted to a "material weakness" in its internal controls. It said steps have been taken to address the problems, but noted management is continuing an internal review.
The huge loss has embarrassed JPMorgan, which made it through the financial crisis with a reputation for taking less risk with its customers' money than other major banks. CEO Jamie Dimon has been called before Congress to explain the debacle, and the Justice Department, the Securities and Exchange Commission and other regulators, including one in Britain, are looking into the loss.
The bank may still face civil fraud charges stemming from filing its original financial statements. If regulators decide employee deceptions caused JPMorgan to report inaccurate financial details, they could pursue charges against the employees, the bank or both.
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