The losses have been blamed due to trades undertaken by the firm’s chief investment office (CIO), managed by Ina Drew, who is in charge of a London-based trader dubbed the "London Whale".
The trader headed the credit desk of the CIO unit, which is an asset class that had built up huge credit positions over several years through trades.
In the past five years, the CIO desk grew rapidly and started trading in a whole range of financial products, except commodities, according to industry sources.
JPMorgan CEO Jamie Dimon said the bank’s strategy was "flawed, complex, poorly reviewed, poorly executed, and poorly monitored."
The biggest US bank by assets in a Securities and Exchange Commission filing, reported that its CIO had significant mark-to-market losses in its synthetic credit portfolio since the end of March 2012.
The bank estimates the unit will post a loss of $800m in the current quarter much contrary to its previous forecast of about $200m in profit.
The losses has raised serious questions about the bank’s ability to meet the Volcker Rule, which has forced US-based banks to cease engaging in so-called proprietary trading involving taking risks with the firm’s own capital.
