“While a trader known as the “London whale” has come to represent a multibillion-dollar blowup at JPMorgan Chase, Congressional investigators have discovered that the problems involved more senior levels of the nation’s largest bank.
A report by the Senate Permanent Subcommittee on Investigations highlights flaws in the bank’s public disclosures and takes aim at several executives, including Douglas Braunstein, who was chief financial officer at the time of the losses, according to people briefed on the inquiry. The report’s findings — scheduled to be released on March 15 — are expected to fault the executives for allowingJPMorgan to build the bets without fully warning regulators and investors, these people said.
The subcommittee, led by Senator Carl Levin, could ask Mr. Braunstein and other senior executives to testify at a hearing this month, according to the people. The subcommittee does not currently intend to call the bank’s chief executive, Jamie Dimon, but Congressional investigators interviewed Mr. Dimon last year.
JPMorgan, which has been cooperating with the investigation and discussed the findings with the subcommittee, declined to comment. Mr. Braunstein and other bank executives have not been accused of any wrongdoing, and he is not the focus of a separate law enforcement investigation into the trading loss.
Congressional officials have yet to set the final details of the hearing and plans may change, the people cautioned. Politico earlier reported the scheduled date for the release of the report.
The Congressional investigation could revive questions about the role of senior executives in the $6 billion trading loss at a time when the bank has started to put the blunder behind it.
Mr. Dimon declared last year that the “Whale has been harpooned.” The bank reported record earnings in January and has forced out the architects of the bet.
The Senate report, however, shifts the focus from lower-level traders in London who placed the bet to senior executives and regulators who failed to stop it. Expanding on a sweeping report the bank released in January, the Congressional inquiry is expected to open a window into how executives ignored warning signs and failed to alert investors about changes to its method for detecting risk….”
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