London Whale trading scandal at JPMorgan Chase in 2012

 What Happened?

• A trader named Bruno Iksil, based in JPMorgan’s London office, was part of the bank’s Chief Investment Office (CIO).
• The CIO was supposed to hedge the bank’s risks but ended up making huge speculative bets on credit default swaps (CDS).
• Iksil took such large positions in the derivatives market that other traders began calling him the "London Whale" due to the sheer size of his trades.
• These trades backfired, leading to $6.2 billion in losses for JPMorgan.

Stock Price Impact

• When JPMorgan first disclosed the losses in May 2012, the stock fell nearly 9% in a single day.
• Over the following weeks, JPMorgan’s stock declined by around 20% from its pre-scandal peak.
• However, due to JPMorgan’s strong overall performance, the stock recovered within a year.

Aftermath

• CEO Jamie Dimon initially dismissed concerns but later called the incident "an egregious mistake".
• JPMorgan faced regulatory scrutiny and ultimately paid over $1 billion in fines.
• The scandal led to stricter risk management practices at the bank.

JPMorgan’s Stock Performance Post-2012 Scandal:

• Pre-scandal peak (early 2012): Around $46 per share.
• Post-scandal low (May 2012): Around $32 (about a 30% decline).
• Recovery within a year (2013): Back to around $50 (above pre-scandal levels).
• Continued uptrend (2015): Stock reached $60-$65 (a 30-40% gain over pre-scandal levels).