'It is not clear how much of this revenue was generated from your proprietary-trading business, hedge-fund activity and private-equity funds that would be affected by the Volcker rule', Suzanne Hayes, assistant director of corporation finance at the SEC, wrote in the initial letter. JPMorgan disclosed in a previous filing that it liquidated proprietary holdings within the equities unit and 'it is not clear if this was the extent of your proprietary-trading business', she wrote.
The letters preceded JPMorgan’s assertion in May that a portfolio of credit derivatives, which bet against the creditworthiness of U.S. companies such as Wal-Mart Stores Inc. (WMT), was a hedge against a weakening economy rather than a proprietary bet. The position was amassed by trader Bruno Iksil, who came to be known as the London Whale because his wager was big enough to move the market.
Hit the link below to access the complete Bloomberg article:
JPMorgan Pressed by SEC on Prop Trading Before Whale Loss
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