[ by Howard Haykin ] JPMorgan Chase on Friday reported trading losses of $5.8 billion, incurred by the bank's London-based Chief Investment Office.  Initially, the bank had estimated $2 billion in losses.  Despite the losses, which JPMorgan allocated to both the 1st and 2nd quarters of 2012, the bank reported a second quarter profit of $5 billion, off about 9% from the same period last year. Based on internal reviews, the bank determined that $1.4 billion of losses would be allocated to the first quarter, which would be restated.  The bank said in a statement that it was no longer confident that company traders had fairly valued positions within the Chief Investment Office during the earlier accounting period.  A total of $4.4 billion in losses were allocated to the current accounting period, the 2nd quarter of 2012. Q2 Results. Revenue fell to $23 billion, off 16% from the $27.4 billion in revenues generated in Q2 of 2011.  Net income also fell, to $5 billion, down from $5.4 billion a year ago.  The trading loss reduced the company's 2nd quarter profit by 69 cents on an after-tax basis. Less than an hour before reporting second-quarter earnings, JPMorgan said that it would be forced to restate its first-quarter earnings because of concerns that traders within the bank misstated positions in an effort to reduce losses on a soured credit derivatives bet.  After the restatement, JPMorgan's Q1 net income will drop by $459 million. Throughout the ordeal, JPMorgan CEO Jamie Dimon has repeatedly said that the bank would remain solidly profitable despite the trading blunder.  He attributed the positive results to the solid performance "all of our client-driven businesses." No Details As to What Hasn't Been Sold. A disappointment of Friday's Q2 earnings reports was that no further clarity was provided about how much large a position was still on hand as a result of the bungled trade.  However, Mr. Dimon told analysts that the riskiness of the trade has been reduced, without indicating any estimates about the size of the remaining bet. However, he did note that, at worst, the soured credit bet could incur further losses of up to $1.6 billion in the 3rd quarter, and added that the Chief Investment Office "will no longer trade a synthetic credit portfolio." Investment Bank Results. Q2 revenue for the investment bank was $6.8 billion, down from $7.3 billion for the same period a year ago.  All in all, JPMorgan was buoyed by its retail financial services, which reported net income of $2.3 billion, up from $383 million last year. JPMorgan also noted that it had slashed compensation within its investment bank by 22%, to $2 billion.  In the same period last year, the investment bank had set aside $2.6 billion to reward its traders and other personnel. Internal Investigation into Trading Losses. Mike Cavanagh, who led the investigation into the trading losses, outlined a series of flaws that contributed to the debacle.  He reiterated much of what Mr. Dimon has said in the past about the trade being "poorly implemented."  But, what's more, Mr. Cavanagh noted that the chief investment office's trades grew in complexity and outpaced the skills and ability of the managers within the unit.  As widely anticipated, JPMorgan announced it would immediately take back compensation from three executives in London. For further details, go to:  [Dealbook, 7/13/12].