John Hogan, who only became chief risk officer in JP Morgan Chase (JPM) in January, will likely be facing some uncomfortable questions following the bank's revelation.
Yesterday it had made $2 billion in trading losses since the beginning of April.
Financial Year
Hogan, 46, who previously been head of risk in the investment banking division, replaced Barry Zubrow as chief risk officer for the whole firm in January, when Zubrow took on the newly created role of head of corporate and regulatory affairs.
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Jamie Dimon, chairman and chief executive, wrote in a memo in January: "Hogan has been the chief risk officer for the investment bank for the last five years - probably the most turbulent time we have ever seen in our industry.
"Barry Zubrow and I believe that it is time to broaden John's responsibilities, and he will now become chief risk officer for the company and will join the operating committee, also reporting to me."
The memo also said that Zubrow would maintain his position on all of the firm's risk committee.
In July last year, the Business Insider blog described Hogan as "so close to Jamie Dimon, he can smell his sweat on a hot day."
In 2009, when JP Morgan was named bank risk manager of the year by Risk magazine, Hogan said: "I don't think there is any doubt the concentration of risks in some firms, which are often similar but managed independently, has surprised a lot of people and will be an area of focus for regulators, auditors and senior management within those institutions."
An email from Hogan related to Lehman Brothers appears in the trove of documents released by law from Jenner & Block in connection to the investment bank's bankruptcy. Hogan wrote on September 9, 2009: "They sent the Junior Varsity - they have no proposal and are looking to us for ideas/credit line to bridge them to the first quarter when they intend to split into good bank/bad bank."
Irving Picard, the bankruptcy trustee who investigated the Bernie Madoff fraud, alleged that Hogan and another JP Morgan employee suspected that Madoff was operating a fraud a longtime before Madoff was arrested. CNN wrote in April last year: "The updated document opens with this quote, which is attributed to Hogan, chief risk officer for JPMorgan: 'For whatever it['s] worth, I am sitting at lunch with Matt Zames who just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a [P]onzi scheme.' "
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