JP Morgan disclosed steep losses in a credit trading division. (Scott Eells / Bloomberg…)
NEW YORK -- JPMorgan Chase & Co. shares plunged 6% in after-hours trading after the bank announced that it suffered steep losses in a portfolio of credit investments.
Jamie Dimon, the bank's chief executive, called the losses "egregious" in a quickly arranged conference call with investors, analysts and reporters.
“The strategy was badly executed and badly monitored,” Dimon said in the call.
Investors responded by dumping the stock. Shares dropped as much 6%, to about $38.50 a share, in after-hours trading on Wall Street.
After the market closed Thursday, JPMorgan told regulators it lost about $2 billion tied to synthetic credit securities. The wrong-way bet was taken by its chief investment office, which the bank uses to help manage its trading risks.
"Since March 31, 2012, CIO [chief investment office] has had significant mark-to-market losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed," the investment bank said in a regulatory filing with the U.S. Securities and Exchange Commission.
In the conference call, Dimon said: "This is not how we want to run a business."
Stocks jump in early trading on Wall Street
U.S. trade deficit widens, suggesting lower GDP growth
Freddie Mac: A second straight week of record low mortgage rates