Jpmorgan Chase London Whale H: Cross-Border Regulation,
2019
Yale School of Management
Jpmorgan Chase London Whale H: Cross-Border Regulation, Arwin G. Zeissler, Andrew Metrick
Journal of Financial Crises
As a global financial service provider, JPMorgan Chase (JPM) is supervised by banking regulatory agencies in different countries. Bruno Iksil, the derivatives trader primarily responsible for the $6 billion trading loss in 2012, was based in JPM’s London office. This office was regulated both by the Office of the Comptroller of the Currency (OCC) of the United States (US) and by the Financial Services Authority (FSA), which served as the sole regulator of all financial services in the United Kingdom (UK). Banking regulators in the US and the UK have entered into agreements with one another to define basic parameters …
Jpmorgan Chase London Whale G: Hedging Versus Proprietary Trading,
2019
Yale School of Management
Jpmorgan Chase London Whale G: Hedging Versus Proprietary Trading, Arwin G. Zeissler, Andrew Metrick
Journal of Financial Crises
In December 2013, the primary United States financial regulatory agencies jointly adopted final rules to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is often referred to as the “Volcker Rule”. Section 619 prohibits banks from engaging in activities considered to be particularly risky, including proprietary trading and owning hedge funds or private equity funds. Banking regulators designed the final rule against proprietary trading in part to prevent losses like the $6 billion London Whale loss that took place in 2012 at JPMorgan Chase. Given the controversial nature of the Volcker Rule, it is …
Jpmorgan Chase London Whale F: Required Securities Disclosures,
2019
Yale School of Management
Jpmorgan Chase London Whale F: Required Securities Disclosures, Arwin G. Zeissler, Giulio Girardi, Andrew Metrick
Journal of Financial Crises
On April 13, 2012, JPMorgan Chase (JPM) Chief Financial Officer Douglas Braunstein took part in a conference call to discuss the bank’s first quarter 2012 earnings. Coming just a week after media reports first questioned the risks taken by JPM derivatives trader Bruno Iksil, Braunstein made a series of assertions about the trades. On May 10, JPM finalized its first quarter financial results, which included some disclosures regarding Iksil’s trading that were substantially different from Braunstein’s statements of April 13. At issue is whether the regulatory filings on April 13 and May 10, as well as verbal comments by Braunstein …
Jpmorgan Chase London Whale E: Supervisory Oversight,
2019
Yale School of Management
Jpmorgan Chase London Whale E: Supervisory Oversight, Arwin G. Zeissler, Andrew Metrick
Journal of Financial Crises
As a diversified financial service provider and the largest United States bank holding company, JPMorgan Chase (JPM) is supervised by multiple regulatory agencies. JPM’s commercial bank subsidiaries hold a national charter and therefore are regulated by the Office of the Comptroller of the Currency (OCC). Since the bank’s Chief Investment Office (CIO) invested the surplus deposits of JPM’s commercial bank units, the OCC was also CIO’s primary regulator. During the critical period from late January through March 2012, when CIO traders undertook the failed derivatives strategy that ultimately cost the bank $6 billion, JPM did not provide the OCC with …
Jpmorgan Chase London Whale C: Risk Limits, Metrics, And Models,
2019
Yale School of Management
Jpmorgan Chase London Whale C: Risk Limits, Metrics, And Models, Arwin G. Zeissler, Andrew Metrick
Journal of Financial Crises
Value at Risk (VaR) is one of the most commonly used ways to measure and monitor market risk. At JPMorgan Chase (JPM), very large derivative positions established by Bruno Iksil in the Synthetic Credit Portfolio (SCP) caused the bank’s Chief Investment Office (CIO) to exceed its VaR limit for four days in a row in January 2012. In response, the CIO changed to a new VaR model on January 30, which appeared to immediately reduce VaR by half. However, JPM soon discovered that this new VaR model had not been properly implemented and the bank went back to using the …
Jpmorgan Chase London Whale B: Derivatives Valuation,
2019
Yale School of Management
Jpmorgan Chase London Whale B: Derivatives Valuation, Arwin G. Zeissler, Andrew Metrick
Journal of Financial Crises
After consistently producing positive results through 2011, the JPMorgan Chase (JPM) traders who oversaw the bank’s Synthetic Credit Portfolio (SCP) grew alarmed by a consistent string of losses beginning in January 2012. (The SCP was maintained by JPM to help hedge default risk and was the source of the 2012 London Whale trading loss.) To minimize the losses reported to their superiors until such time that market prices hopefully turned in their favor, the SCP traders began valuing their largest derivative positions in a manner that was not consistent with Generally Accepted Accounting Principles (GAAP) and JPM policy. The fair …
Jpmorgan Chase London Whale A: Risky Business,
2019
Yale School of Management
Jpmorgan Chase London Whale A: Risky Business, Arwin G. Zeissler, Daisuke Ikeda, Andrew Metrick
Journal of Financial Crises
In December 2011, the Chief Executive Officer and Chief Financial Officer of JPMorgan Chase (JPM) instructed the bank’s Chief Investment Office to reduce the size of its Synthetic Credit Portfolio (SCP) during 2012, so that JPM could decrease its RiskWeighted Assets as the bank prepared to adopt the impending Basel III bank capital regulations. However, the SCP traders were also told to minimize the trading costs incurred to reduce Risk-Weighted Assets, while still maintaining the opportunity to profit from unexpected corporate bankruptcies. In an attempt to balance these competing objectives, head SCP derivatives trader Bruno Iksil suggested in January 2012 …
The Temporary Liquidity Guarantee Program: A Systemwide Systemic Risk Exception,
2019
Federal Deposit Insurance Corporation
The Temporary Liquidity Guarantee Program: A Systemwide Systemic Risk Exception, Lee Davison
Journal of Financial Crises
In the fall of 2008, short-term credit markets were all but frozen, creating liquidity issues for banks and bank holding companies that could not rollover their debt at reasonable rates. Fearing that the situation would worsen if something was not done, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board invoked, and the Secretary of the Treasury approved, the use of the “systemic risk exception” (SRE) under the Federal Deposit Insurance Corporation Improvement Act of 1991, to provide unprecedented broad-based relief to struggling banks. The SRE permitted the FDIC to depart from its “least-cost” requirement when addressing failing …
Domestic Asset Protection Trusts: Ushering In The Klackaba Era,
2019
Seattle University School of Law
Domestic Asset Protection Trusts: Ushering In The Klackaba Era, Cheyenne Vankirk
Seattle University Law Review
The growth in the U.S. economy has allowed Americans to increase their savings--but how? A novel approach has emerged in seventeen states: domestic asset product trusts (DAPTs). DAPTs are self-settled spindthrift trusts that allow the settlor to retain a beneficial interest in the trust while removing it from the reach of future creditors. Through the lens of the favorable ruling in Klackaba v. Nelson, this Note addresses why DAPTs should be regarded as an effective method of protecting a settlor’s money and argue for more states to follow suit.
The Increasing Reliance On Educational Loans By University Of Michigan Law School Graduates,
2019
University of Michigan Law School
The Increasing Reliance On Educational Loans By University Of Michigan Law School Graduates, David L. Chambers
Bibliography of Research Using UMLS Alumni Survey Data
Among graduates of the University of Michigan Law School in the classes of 1970 through 1979, about half borrowed to pay for their college or legal education. By the early 1980s the portion who borrowed had risen to about 80 percent and has remained at that level through the classes of early twenty-first century. Even greater growth has occurred in the average debt of those who incurred debt. In actual dollars, average debts among those with debt have increased twenty-fold from the 1970s to the early 2000s. Even in CPI-adjusted dollars, average debts have tripled. By the classes of 2000-2001, …
Still Standing, Barely: Bank Of America Corp. V. City Of Miami And The Impact On Fair Lending Litigation,
2019
University of Maryland Francis King Carey School of Law
Still Standing, Barely: Bank Of America Corp. V. City Of Miami And The Impact On Fair Lending Litigation, Trevor C, Hoffberger
Maryland Law Review
No abstract provided.
Equal Protection Supreme Court Appellate Division Third Department,
2019
Touro University Jacob D. Fuchsberg Law Center
Equal Protection Supreme Court Appellate Division Third Department
Touro Law Review
No abstract provided.
Nonprofit Governance: The Basics,
2019
The University of Akron
Nonprofit Governance: The Basics, Lawrence J. Trautman, Janet Ford
Akron Law Review
Nonprofit organizations are prevalent in today’s economy, and many are governed by individuals who have been chosen on the basis of their advocacy of or contributions to various nonprofit causes rather than on the basis of business experience or acumen. Yet effective nonprofit governance, while presenting concerns unique to nonprofits, also presents many of the same concerns as does governance of for-profit entities. This article seeks to provide a primer for nonprofit organizations that need to recruit effective governance talent. First, we discuss the nature of nonprofits, their impact on the business landscape, and their similarities to and differences from …
Imposing A Deadline On The Irs: Artificial Intelligence Tries To Beat 'Starcraft' While The Irs Tries To Regulate Virtual Currency,
2019
The University of Akron
Imposing A Deadline On The Irs: Artificial Intelligence Tries To Beat 'Starcraft' While The Irs Tries To Regulate Virtual Currency, Paul C. Nylen
Akron Law Review
Virtual currencies demanded serious attention in 2017 due to public interest, media attention, and investor appetite. With this increased attention on virtual currencies comes significant business, legal, and tax risks. This article serves as a launching pad for those tax risks, and attempts to predict how the IRS will react. By focusing on the IRS’s treatment of virtual currency as property, as well as discussing other tax issues like Foreign Bank Account Reporting (FBAR) compliance and like-kind exchanges under Internal Revenue Code section 1031, this article highlights the difficulty the IRS will have in regulating the ever-expanding world of virtual …
Defying Mcculloch? Jackson’S Bank Veto Reconsidered,
2019
University of Wisconsin, Madison
Defying Mcculloch? Jackson’S Bank Veto Reconsidered, David S. Schwartz
Arkansas Law Review
On July 10, 1832, President Andrew Jackson issued the most famous and controversial veto in United States history. The bill in question was “to modify and continue” the 1816 “act to incorporate the subscribers to the Bank of the United States. This was to recharter of the Second Bank of the United States whose constitutionality was famously upheld in McCulloch v. Maryland. The bill was passed by Congress and presented to Jackson on July 4. Six days later, Jackson vetoed the bill. Jackson’s veto mortally wounded the Second Bank, which would forever close its doors four years later at the …
Overruling Mcculloch?,
2019
University of Marlyand, Baltimore
Overruling Mcculloch?, Mark A. Graber
Arkansas Law Review
Daniel Webster warned Whig associates in 1841 that the Supreme Court would likely declare unconstitutional the national bank bill that Henry Clay was pushing through the Congress. This claim was probably based on inside information. Webster was a close association of Justice Joseph Story. The justices at this time frequently leaked word to their political allies of judicial sentiments on the issues of the day. Even if Webster lacked first-hand knowledge of how the Taney Court would probably rule in a case raising the constitutionality of the national bank, the personnel on that tribunal provided strong grounds for Whig pessimism. …
M'Culloch In Context,
2019
University of Arkansas, Fayetteville
M'Culloch In Context, Mark R. Killenbeck
Arkansas Law Review
M’Culloch v. Maryland is rightly regarded as a landmark opinion, one that affirmed the ability of Congress to exercise implied powers, articulated a rule of deference to Congressional judgments about whether given legislative actions were in fact “necessary,” and limited the ability of the states to impair or restrict the operations of the federal government. Most scholarly discussions of the case and its legacy emphasize these aspects of the decision. Less common are attempts to place M’Culloch within the ebb and flow of the Marshall Court and the political and social realities of the time. So, for example, very few …
How Did We Get Here? Dissecting The Hedge Fund Conundrum Through An Institutional Theory Lens,
2019
Washington and Lee University School of Law
How Did We Get Here? Dissecting The Hedge Fund Conundrum Through An Institutional Theory Lens, Cary Martin Shelby
Scholarly Articles
This article dissects both the origins and resulting harms of what the author terms the "hedge fund conundrum," in which institutional investors, such as pension plans and endowments, have consistently increased hedge fund allocations over the past decade despite pervasive evidence of excessive fees and subpar returns. It then utilizes an historical institutionalist lens to examine how lawmakers may have enabled a conundrum of this magnitude. By and large, this phenomenon is a symptom of regulatory loopholes that have permitted the private hedge fund market to increase in "publicness" through its expanding access and subsequent harm to retail investors. Such …
Incumbency Or Innovation: Why A Collective Agency View Of Cross-Border Payments Means Private Blockchains Cannot Prevail,
2019
J.D., Cornell Law School, 2020
Incumbency Or Innovation: Why A Collective Agency View Of Cross-Border Payments Means Private Blockchains Cannot Prevail, Boaz B. Goldwater
Cornell International Law Journal
The abstract below was generated using an artificial intelligence tool. It has not been endorsed by the author. This Note examines the global cross-border payments system through the lens of collective action theory, arguing that the Society for Worldwide Interbank Financial Telecommunication (SWIFT) functions not merely as a financial messaging network but as a collective agent essential to the stability and legitimacy of international finance. While technological innovations—particularly blockchain-based platforms such as Ripple—promise improvements in speed, cost, and efficiency, the author contends that these advantages alone are insufficient to supplant SWIFT. The cross-border payments system requires not only technical functionality …
An Empirical Investigation Of Third Party Consumer Litigant Funding,
2019
Tel Aviv University
An Empirical Investigation Of Third Party Consumer Litigant Funding, Ronen Avraham, Anthony Sebok
Cornell Law Review
No abstract provided.
