Jp Morgan Financial Restatement

Submitted by: Submitted by

Views: 375

Words: 720

Pages: 3

Category: Business and Industry

Date Submitted: 09/30/2012 02:16 PM

Report This Essay

JP Morgan Chase & Company Restates its Interim 2012 Financial Statement

JP Morgan Chase & Company Restates 2012 Financial Statement

JP Morgan Chase & Company, a leading global finance services firm with worldwide operations and assets exceeding $2.3 trillion dollars, reported their intention to restate the company’s 2012 1st quarter interim financial statement.

What Triggered the Restatement?

In another scandal the rocketed investors, public and financial communities alike JP Morgan made current headlines. One such example follows…” ‘Errors, sloppiness and bad judgment’: JP Morgan rocked by $2bn CIO loss shock.” (Euroweek, 2012).

Post JP Morgan’s 2012 1st quarter SEC filing the company announced that their Chief Investment Office (CIO) has been impacted by a “significant mark to market losses” in their London offices hedge accounts. (Euroweek, 2012)

Large bets were undertaken in efforts to hedge the company in the current credit stressed environment. These bets backfired and resulted in public embarrassment as well as strengthening the proponents of the Volcker Rule. (FOi, 2012)

The Volcker Rule was created to circumvent financial institutions from using FDIC insured client’s funds to make risky trades, putting the burden on the taxpayers for any losses and/or failures.

Accounting Principals Involved

In the case of JP Morgan’s restatement the accounting principal involved was a correction of error for improper valuation. Specifically, the review of JP Morgan’s CIO found evidence that brought to question the integrity of the valuation of its London office synthetic credit portfolio. It was further disclosed that the initial trading losses, currently reported at $4.4 billion dollars, was attempted to be hidden by the CIO resulting in the notification to the SEC, investors and public as to no confidence in their valuation of their synthetic portfolio.

A revaluation was initiated based upon “external’ market benchmarks which was inclusive...