The JP Morgan CIO's Special Investment Unit Invested In LightSquared — Now It's Being Spun Out


Photo: Flickr ReSurge International

Is this what it looks like when a bank unit gets a colonoscopy?JP Morgan’s Chief Investment Office (you know, the one responsible for the massive $2 billion+ trading loss) is spinning off its ‘special investment unit,’ says the FT. It will be moved to the corporate division and stopped from making any more ‘exotic’ investments.

Now, this isn’t because the SIU was involved in the massive trading loss — they actually had nothing to do with it — they’re getting cut off because their investments were just bad. As you can imagine, JP Morgan has become rather risk averse in recent weeks.

From the FT:

The overhaul is part of a broader audit of risk-taking and risk controls at the bank… The special investments group made a handful of private equity investments in groups including LightSquared, which has filed for bankruptcy protection, and Johnson Publishing, publisher of Ebony magazine.

LightSquared, hedge funder Phil Falcone’s now bankrupt multi billion dollar telecom start-up, was a risky investment to say the very, very least.

Maybe we don’t even want to know what else is in there.

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