[by Larry Goldfarb] The Sunday Edition of The NYTimes (5/27) provides an excellent account of how one trader in JPMorgan Chases's Chief Investment Office, Bruno Iksil, singlehandedly took on a legion of hedge fund managers who were all too eager to sell derivative positions to Mr. Iksil.  They knew they were dealing with the so-called 'London Whale' who had a penchant for executing oversize trades and holding  enormous investment positions.  Mr. Iksil and his associates in JPMorgan's CIO had such a successful track record that they were hardly ever second-guessed by JPMorgan officials - least of all CEO Jamie Dimon. But in the complex world of derivatives, nearly everyone except for Mr. Iksil recognized that the analysis and logic behind JPMorgan's proprietary trade desk somehow didn't add up which created a fortuitous opportunity for hedge fund managers to serve as counterparties to JPMorgan's transactions. While early indications seemed to favor JPMorgan's trade strategy, the markets and global economies eventually turned against Mr. Iksil and JPMorgan as fund managers had anticipated.

Note to Readers: At this point, you have an option.  Continue reading C-I's Executive Summary - see below;  alternatively, click to access the Referenced Story:  [NYTimes, "The Hunch, the Pounce...," 5/29/12]. Either way, you'll get the exploits of JPMorgan's Bruno Iksil and a key counterparty Boaz Weinstein who operates the NY-based the hedge fund Saba Capital Management.

C-I Summary: As depicted in The NYTimes, the set-up seemed well suited for for the 1971 movie,"The Sting ."  On one side you have the genius (often evil), backed by money and power - that would be JPMorgan's Bruno Iksil. His counterpart on the outside, is the bright competitor, who lacks little if anything, other than perhaps robust resources to directly complete - that would be Boaz Weinstein. Of course, Weinstein is aided by a small  army of compatriots, who no doubt are fellow-hedge fund managers.  FYI:  Weinstein is A former trader at Deutsche Bank and a successful manager, he currently runs $5.5bn Saba Capital Management hedge fund from the 58th floor of the Chrysler building, in New York. So picture Iksil as Robert Shaw with a Scottish/ English accent challenging Boz Weinstein, Paul Newman in the movie, to game of Poker. The first thing Shaw does is push all his chips to the middle. Shaw also has a colleague, with a weapon, standing behind Newman catching a glimpse of his cards. Newman finds enough funds to match Shaw and the game is on. This game is played out in movie after movie. Shaw is ultimately beaten by the upstart Newman. In the JP Morgan scenario, Weinstein realizes that Iksil is his protagonist. Despite holding a losing position as Iksil continues to load up on what Weinstein believes is a losing position, Weinstein encourage others to buy into the trade, He even goes to a charity event and mocks Iksil and JPM to encourage others to participate. The laughter in the room translates to trades as most know exactly the trade he is referring too. When they find out that it is JPM, the volume on the "upstart" side grows precipitously. When others buy so much of the trade as to match that of JPM, the trade starts to lose and as Weinstein predicts, Iksel starts trying to unload. But now that everyone knows that it is the big mark who can't afford to show a losing hand, and thus demand higher and higher prices thus exacerbating the loss. Iksil, The "Big Whale" is stung. The others walk away as heroes. Now, the authorities are getting involved.  I know I've seen this movie before!