Trading surges that temporarily boosted the value of credit derivatives held by JPMorgan Chase & Co. may provide clues about whether traders at the bank masked losses that have spiraled to $5.8 billion.
Spikes in late January and again at the end of February, which more than doubled the volume of trades in an index tied to the creditworthiness of companies, lowered the cost of the index, raising the value of the bank’s holdings. The surges came just before end-of-the-month bank audits to verify prices.
The trading patterns offer a road map for investigators after the biggest U.S. bank by assets restated first-quarter earnings to account for a larger loss on the derivatives than previously disclosed. JPMorgan, which shut the London-based group responsible for the trades in its chief investment office, said an internal probe found evidence, without providing specifics, that employees may have tried to hide losses.
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