‘Whale’ to Cost J.P. Morgan’s Dimon Coveted Honor
J.P. Morgan’s $6.2 billion trading blunder may not cost Chief Executive Jamie Dimon his job, but it will likely strip him of the title of Wall Street’s highest-paid top man.
Dimon, who is expected to share blame for the credit derivatives trading debacle in a soon-to-be-released internal report, will see his bonus slashed by the bank’s board of directors, according to The Wall Street Journal. Dimon took home $23.1 million in total compensation in 2011, trumping his next closest rival, Wells Fargo CEO John Stumpf, by more than $3 million.
The report, to be released on Wednesday, blames Dimon, along with former Chief Investment Officer Ina Drew and former Chief Financial Officer Doug Braunstein, for a lack of oversight over the bank’s highly lucrative investment unit that managed the firm’s excess cash and risk. The now-infamous Chief Investment Office, run by Drew, bet big on a series of complex credit derivatives trades that it couldn’t exit, leading to massive losses for J.P. Morgan and strong gains for competitors who bet against the firm.
Drew left J.P. Morgan last year in the wake of the scandal while Braunstein was moved into the role of vice chairman. Dimon had his reputation sullied, particularly after denying initial reports of the “London Whale” fiasco, but held tight to reins. The Journal reported that Dimon is encouraging the prompt issuing of the report, preferring to "let it all hang out” in an effort to increase transparency.
J.P. Morgan has weathered the storm caused by the London Whale fairly well under Dimon, despite the massive trading loss. The firm’s capital markets business is expected to be Wall Street’s most profitable in 2012, with pre-tax profits exceeding $6 billion, according to one recent estimate.
Mark Mahaney, who was fired from Citigroup in October for his role in the botched Facebook IPO, “firmly stands” by his calls on this social network and “strongly disagreed” with Citi’s decision to let him go. Mahaney started his new gig at RBC Capital last week.
Declining trade volumes and an uptick in automated trading have forced investment banks to cut more staff in equities than in any other unit.
Russell Wasendorf Sr., the disgraced former chief executive of Peregrine Financial Group, will be sentenced on Jan. 31 after pleading guilty to fraud and embezzlement charges. The 64-year-old faces between 24 and 50 years in prison.
Morgan Stanley Chief Financial Officer Ruth Porat is being considered for the role of deputy Treasury secretary.
Piero Novelli, the former head of global M&A at UBS, has left Nomura to rejoin the Swiss bank in a similar role.
Disciplinary cases in London’s financial center are skyrocketing, with firings and suspensions up 76% in 2012 compared to a year earlier.
Buzz Around the Office
Imagine you are at an NBA basketball game and are picked out of a crowd of 30,000 people to shoot a half-court for some big cash, and this happens.
List of the Day: Regaining Focus
Losing focus at work? Try these three time-tested hints.
- Pick up a stimulating hobby.
- Avoid computers first thing in the morning.
- Integrate your to-do lists.