JPMorgan executives expected to leave over loss

(Reuters) - Three executives involved with the failed hedging strategy that has left JPMorgan Chase & Co with a $2 billion trading loss and a tarnished reputation are expected to leave the bank this week, sources close to the matter said on Sunday.

The company is expected to accept the resignation of Ina Drew, its chief investment officer and one of its highest-paid executives, in the next few days, the sources said. Two of Drew's subordinates who were involved with the trades, Achilles Macris and Javier Martin-Artajo, are expected to be asked to leave, according to the sources.

The unit Drew runs, known as the Chief Investment Office, mismanaged a portfolio of derivatives tied to the creditworthiness of bonds, according to bank executives. The portfolio was layered with hedging strategies that became too complicated to work and too big to unwind in the esoteric market.

Drew had repeatedly offered to resign after the magnitude of the debacle became clear, according to one of the sources. But the resignation was not immediately accepted because of Drew's past performance at the bank.

Until the loss was disclosed on Thursday night, Drew was considered in the industry to be one of the best managers of balance-sheet risks. She earned more $15 million in each of the last two years.

"Ina is an amazing investor," said a money manager who knows Drew, but who declined to be quoted by name. "She's done a really good job over a lot of years. But they only remember your last trade."

'SLOPPY', 'STUPID'

CEO Jamie Dimon said when he announced the loss on Thursday that the bank was continuing to investigate what went wrong and that disciplinary actions would be taken.

Dimon called the handling and oversight of the derivative portfolio "sloppy" and "stupid."

Earlier on Sunday, Dimon said in a nationally televised interview that bank executives had reacted badly to warning flags last month that it had large losses in financial derivatives trading.

In the interview on NBC's "Meet the Press" television program, Dimon said bank executives were "completely wrong" in public statements they made in April after being challenged over the trades in media reports.

"We got very defensive. And people started justifying everything we did," Dimon said. "We told you something that was completely wrong a mere four weeks ago.

The loss, and Dimon's failure to heed the warnings, have become major embarrassments and have given regulators new arguments for tightening controls on big banks and requiring them to hold more capital to cushion possible losses.

The comments to NBC were Dimon's first public statements since he spoke to analysts in a conference call on Thursday. He is scheduled to speak again on Tuesday at the company's annual meeting in Tampa, Florida.

JPMorgan is the biggest bank in the United States by assets and has major investment banking and trading operations in Europe. The losses in Drew's unit stemmed from trades largely made in London in credit default swaps, an instrument that institutions use to buy and sell insurance against defaults and declines in the market value of bonds.

Some of the trades attracted attention and gossip in the swaps earlier this year because of their size. One JPMorgan trader working the portfolio, Bruno Iksil, was dubbed the 'London Whale.'

(Reporting by David Henry and Carrick Mollenkamp in New York and Rick Rothacker in Charlotte, North Carolina.; Editing by Marguerita Choy and Muralikumar Anantharaman)