Bloomberg News’s Stephanie Ruhle, Bradley Keoun, and Mary Childs were the first reporters to write about the “London Whale’ (The JPM trader at the centre of these big trading losses) last April.It’s not a big surprise that she was first, since she’s a well-connected former trader.
Normally it wouldn’t be of particular note how the story came about, but… in this case, it seems that the original stories about Iksil actually contributed to the losses, as traders pushed against him.
From Bloomberg, here’s her comment on the story.
“I joined Bloomberg Television last October after spending fourteen years on the Street, covering hedge funds for structured credit. So I’ve been in the credit derivatives space since its inception. Of course, in the post-2008 world, this niche market has shrunk dramatically, with a lot of sell side firms shutting down their desks, except one: JP Morgan.”
“Now, when I first starting hearing about this story from my sources back in April, I assumed it was noise from some guys on the wrong side of a trade or two. But it turned out this wasn’t a one-off tale – not even close.”
“I kept hearing the same story, over and over: that JP Morgan was trading monster size in off-the-run IG indices on a regular basis. And it’s not as if volatility had spiked and major adjustments to portfolios had to be made. These trades were being described to me as ‘epic’ in size.”
“Now I actually met Achilles Makris last summer and he has a first-rate reputation. As does Irene Tse in NY and Ina Drew, a global figure. Bruno Iksil was no exception – first class.”
“But these trades just weren’t JP Morgan’s modus operandi.And they raised pretty basic questions – given what has happened since 2008, how is the largest client in the market sitting inside a bank? And why is he treading US markets and located in London?”
“The whole CDS community was talking about it and wondering what it was they were missing. I couldn’t testify to exactly what was wrong, but I knew it didn’t pass the smell test.”
“My background on Wall Street gave me enough sense to realise this story had some legs. Journalism is much like any business – jargon is half the battle. I don’t know all the intricacies of Credit Index trading, etc. but I do know enough to ask a few questions. Those questions led to answers that only prompted more questioning…and eventually to CEO Jamie Dimon having to address it all.”
“The JPM conference call yesterday was a shocker for many. And since seasoned veterans were telling me our story was all wrong, of course I was having my doubts. And many of the experts were dismissive that there was anything amiss.”
“To Dick Bove’s credit, he admitted this morning that Bloomberg had it right. There is still much to be gathered about what really went on, and I doubt we will ever know the whole story. Personally, it’s great I got this one ‘right.’ But now it’s time to go find another one.”