London broil: JPMorgan lost $4.4 billion on derivatives trades made by the firm’s chief investment office, according to a company press release, short of high-end estimates of as much as $9 billion. Meanwhile, a diclosure filed with the Securities and Exchange Commission says that employees may have lied to conceal the scope of losses. JPMorgan’s chief investment office will no longer trade the credit derivatives that lead to the losses. Bruno Iksil, the JPMorgan trader known as the London Whale, has left the firm, The Wall Street Journal reports, along with Achilles Macris and Javier Martin-Artajo, two of Mr. Iksil’s superiors in JPMorgan’s chief investment office. Jamie Dimon & Co. are hosting what is said to be a two-hour presentation to report second-quarter earnings and break down the firm’s recent trading losses. Listen to it here.
Libor-ated: It surfaced earlier in the week that the Federal Reserve Bank of New York had raised concerns about Barclays Libor submissions as early as 2008. Now The New York Times has gotten its hands on a May 2008 email from then-New York Fed president Tim Geithner suggesting improvements to the rate-setting process. Ten Democratic senators signed a letter to Attorney General Eric Holder and Mr. Geithner (now Treasury secretary) among others urging a response to the Libor scandal: “We urge you to direct your staff to thoroughly investigate the banks and the process involved in setting Libor for any wrongdoing. Banks and their employees found to have broken the law should face appropriate criminal prosecution and civil action.”
Libor liabilities: Alphaville, with the aid of a Morgan Stanley research report, looked at what Libor is likely to cost the banks (something like $450 million to $850 million per bank in fines; about $400 million per bank in litigation costs). Naked Capitalism, also with Morgan Stanley research, speculates to what bankers gained from rigging-rates, and comes up with a roughly $290 million to $360 million per bank in additional compensation over the course of four years.
Futures fiasco: Doubts about PFGBest, the Iowa-based futures broker that filed for bankruptcy this week after regulators discovered that the firm was missing more than $200 million in client funds, go back as far as 2004, The Times reports: In that year, a client wrote to the PFGBest’s regulators about potential misuse of client money, and in 2009, a tipster asked the National Futures Association to review the broker’s bank account. Reuters, which has been in front of this story from the start, reports that PFGBest founder Russell R. Wasendorf may have lost more than $100 million through his investments in Romanian real estate.
Plan B: Vanguard Group is considering a move into retail banking, which could provide the mutual fund giant with a backup plan pending potential changes to the regulation of money market funds.
Paid up: Wells Fargo will pay a $125 million fine to settle charges that it discriminated against minority borrowers.
Date with lawmakers: HSBC executives will face questions from the Senate’s Permanent Subcommittee on Investigations regarding the bank’s anti-money laundering efforts.