NEW YORK – JPMorgan Chase said Friday that a bad trade cost the bank $5.8 billion this year, almost triple its original estimate, and raised the prospect that traders had improperly tried to conceal the blunder.

“This has shaken our company to the core,” CEO Jamie Dimon said.

The bank said managers tied to the bad trade had been dismissed without severance pay and that it planned to revoke two years’ worth of pay from each of those executives.

JPMorgan said it had lost $4.4 billion because of the trade from April through June, and its chief financial officer said the bank had lost an additional $1.4 billion in the first three months of the year.

Dimon’s original estimate of the loss from the bad trade, disclosed in a surprise conference call with Wall Street analysts in May, was $2 billion.

On Friday, Dimon said he believed the loss was mostly contained. In the worst case, if financial markets deterioriate severely, the bank could lose an additional $1.7 billion, he said. That would bring the total loss to $7.5 billion.

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Investors appeared relieved that the mess was mostly behind the bank. They sent JPMorgan’s stock price up $1.50, or more than 4 percent, to $35.54. That made it the best-performing stock in the Dow Jones industrial average.

The bank said an internal investigation, including emails and voice messages, had called into question the values that traders placed on certain bets, and that the traders may have been seeking to mask losses.

Dimon told Congress last month that the trade was meant to hedge risk at the company and protect it in case “things got really bad” in the global economy. Instead, the trade backfired and damaged the bank’s reputation.

Speaking broadly about the trading loss Friday, Dimon told analysts: “We’re not making light of this error, but we do think it’s an isolated event.”

The bank said that it was reducing its net income for the first quarter by $459 million because it had discovered information that “raises questions about the integrity” of values placed on certain trades.

Dimon said the bank had closed the trading division responsible for the bad trade and moved the remainder of the trading position under its investment banking division.

Just three months ago, JPMorgan was viewed as the top American bank. Dimon, who originally dismissed concerns about the bank’s trading as a “tempest in a teapot,” appeared before Congress twice to apologize and explain himself, and several government agencies have launched investigations.

 


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