JPMorgan Folds London Whale’s Office Into Another Division

Apr 04, 2014 4:50 am ET

(Updates with background from fourth paragraph.)

April 4 (Bloomberg) -- JPMorgan Chase & Co., the biggest U.S. bank by assets, said it will merge the operation that produced a $6.2 billion trading loss in 2012 with another business unit.

The chief investment office will be folded into the New York-based bank’s Treasury unit, Chief Operating Officer Matt Zames said in an internal memo obtained yesterday by Bloomberg News. Craig Delany will lead the new group as global chief investment officer and treasurer, Zames said.

The moves are part of the bank’s “efforts to strengthen and streamline our infrastructure, processes and controls,” Zames said in the memo dated March 31. Brian Marchiony, a spokesman for the bank, confirmed the contents of the memo.

Bruno Iksil, a trader nicknamed the London Whale because of the size of his positions, accumulated the $6.2 billion loss by making market-distorting bets on derivatives. The episode -- initially dismissed by Chief Executive Officer Jamie Dimon as a “tempest in a teapot” -- erased as much as $51 billion of shareholder value, and prompted multiple probes by regulators.

The losses also led to criminal charges against two of Iksil’s former colleagues, the departure of at least four senior managers -- including former Chief Investment Officer Ina Drew - - and dented the reputation of Dimon, who also took a pay cut.

JPMorgan was fined more than $1 billion and regulators criticized the firm for its poor internal controls. The company also is grappling with probes of its hiring practices in Asia and criminal inquiries tied to mortgage-bond sales and energy trading.

The Financial Times reported JPMorgan’s moves yesterday.

Treasurer Sandie O’Connor was named chief regulatory affairs officer, succeeding Tim Ryan who becomes vice chairman of regulatory affairs, Zames said.

The stock climbed 0.3 percent to $60.66 in New York trading yesterday, bringing its gain this year to 3.7 percent.