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Jamie Dimon Gets Pay Cut But Escapes 'Whale' Blame

Stocks in this article: JPM

NEW YORK ( TheStreet) -- JPMorgan Chase (JPM) released on Wednesday the results of an internal probe into the bank's infamous trading loss in 2012 that

A management task force led by Mike Cavanagh, current co-CEO of the Corporate and Investment Bank at JPMorgan, was set up last year to investigated the losses at the bank's chief investment office (CIO).

While the task force blamed direct responsibility for the losses with the traders for designing and implementing their flawed trading strategy, it also laid a fair share of the blame with the firm's senior management.

Specifically, it blames Chief Investment Officer Ina Drew for failing to ensure that the CIO management understood the trading strategy and appropriately monitor it, failing to ensure that the CIO controls were effective and for failing to appreciate the magnitude and significance of the change in the synthetic credit portfolio in the first quarter of 2012.

It also blames Barry Zubrow, then Chief Risk Officer, for failures of the CIO risk organization.

It also concluded that former CFO Doug Braustein failed to ask more questions or seek additional information about the evolution of the portfolio in the first quarter.

The task force goes relatively easy on Dimon, citing his own comments on his negligence right from the start. "CIO, particularly the Synthetic Credit Portfolio, should have gotten more scrutiny from both senior management, and I include myself in that, and the Firm-wide Risk control function," Dimon said in reviewing the losses last year.

"As Chief Executive Officer, Mr. Dimon could appropriately rely upon senior managers who directly reported to him to escalate significant issues and concerns. However, he could have better tested his reliance on what he was told," the report said. "Importantly, once Mr. Dimon became aware of the seriousness of the issues presented by CIO, he responded forcefully by directing a thorough review and an internal program of remediation. Mr. Dimon reports to the Board, and the Board will weigh the extent of Mr. Dimon's responsibility.

Separately, the board decided to cut Dimon's pay in half to $11.5 million in 2012, in light of the bungled up trade.

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