Photo: Getty Images/Chip Somadevilla
(Reuters)—JPMorgan Chase & Co. has picked Lee Raymond, ex-chief executive officer of Exxon Mobil Corp, to head an inquiry by company directors into losses in a credit derivative portfolio run by its London-based Chief Investment Office, according to a source familiar with the matter.The company’s board also appointed fellow directors William Weldon, chairman of Johnson & Johnson, and real estate developer Laban Jackson to the inquiry panel.
Raymond, 73, was CEO and chairman of Exxon from 1993 to 2005 and already holds the position of “presiding director” of the JPMorgan board.
The board assignments were made in May shortly after the losses were revealed, but were reported on Monday by the Wall Street Journal.
A JPMorgan representative declined to comment.
The directors’ probe is in addition to one by company management and is taking place while federal prosecutors and the U.S. Securities and Exchange Commission are investigating the matter.
Company executives said in July that their investigation had found evidence indicating that traders had mismarked the value of the derivatives to hide losses. That finding could provide an out for company management from possible claims that they did not properly disclose the situation to investors, such as when CEO Jamie Dimon in April called press reports of possible losses a “tempest in a teapot.”
The board panel, which will double-check the findings of management and interview company employees when necessary, is not expected to complete its review until late fall or early winter, the sources told the Journal.
JPMorgan said on August 9 that it hoped to restart its stock buyback program in the first quarter, roughly three months later than the goal Dimon announced in July. Before the bank can resume repurchases, regulators must approve them, and the board must complete its review of the trading debacle.
JPMorgan, whose $2.29 trillion of assets make it the biggest U.S.-based bank, has been fighting to reclaim its reputation after the Chief Investment Office built up a massive credit derivatives portfolio that had trading losses of nearly $6 billion.
The losses from the bets, known as the “London Whale” trades after the nickname of one of the CIO’s traders, were a huge blow for Dimon, who was long praised for his risk-management skills.
Shares of JPMorgan were down 0.3 per cent at $36.88 in trading before the market opened.
(Reporting by David Henry in New York and Siddharth Cavale in Bangalore; Editing by David Holmes and Lisa Von Ahn)
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