Discord at JPMorgan Investment Office Blamed in Huge Loss:
Ms. Drew’s firm hand began to weaken after she contracted Lyme disease. Her absences opened the door for tensions among her deputies to flare into the open.... [H]er deputy in New York was increasingly at loggerheads with her deputy in London who spearheaded the strategy behind the losing bet, Achilles Macris.... But there was only so much she could do when she was away, even though some current traders and senior executives at the bank emphasized that Ms. Drew remained vigilant....
[T]he chief investment office was performing well, earning sizable profits for JPMorgan even as other businesses at the bank, like home loans, began to hemorrhage money. Those gains came as the size of the unit’s trades was increasing, but the office’s success blunted questions that were raised about the added risk. During this time, Mr. Macris gained more latitude to build and expand trades.... Althea Duersten, who was Mr. Macris’s counterpart in New York and oversaw North American trading, raised objections to Mr. Macris’s outsize bet but was routinely shouted down by Mr. Macris during conference calls between London and New York, former traders said....
Ms. Drew eventually returned from sick leave and reasserted herself as head of the chief investment office. But instead of sitting one floor above the trading desk, as she had done previously, Ms. Drew, in a reflection of her rising profile, moved upstairs to an office among senior executives on the 48th floor.... The situation worsened in early 2011 when Irene Tse, who came from the hedge fund Duquesne Capital Management, took over for Ms. Duersten as head of the North American trading desk. The chief investment office continued to post healthy profits in 2011, as it had in 2010 and 2009. But the size of its bets continued to grow, and many of the trades assembled by Mr. Macris’s traders were growing more complex, making them harder to exit.... In addition, Ms. Tse was even less equipped to battle Mr. Macris because, unlike Ms. Duersten, she was a newcomer to the firm.... On the conference calls, the yelling continued, only now it was between Ms. Tse and Mr. Macris...
