It Turns Out That JPMorgan Bought The ‘Nickel’ That Was Actually ‘A Bag Of Rocks’

2023 has not been a glowing one for JPMorgan.

In mid-January, we discovered that the giant US bank was tricked into paying $175 million for some millennial’s fake rolodex to enhance its college financial aid platform.

Javice allegedly fabricated an enormous list of “fake customers – a list of names, addresses, dates of birth, and other personal information for 4.265 million ‘students’ who did not actually exist.“

Oops.

But, now, in mid-March, we may have an even more embarrassing moment for Jamie Dimon.

Some may remember, but in early February, we reported details of a huge nickel trading scam that involved Trafigura (one of the world’s largest commodity traders) facing 100s of millions of dollars in losses, after discovering metal cargoes it bought from an Indian businessman didn’t contain the metal they were supposed to.

“Since late December 2022, a small proportion of the containers purchased from these companies have been inspected as they reached their destination, and were found not to contain nickel,” Trafigura said in the statement.

Well, it turns out, Trafigura was not alone.

The Wall Street Journal reports that, according to people familiar with the matter, JPMorgan owned the LME nickel contracts that turned out to be backed by bags of stones rather than metal.

Last week, the LME announced that it had canceled nine nickel contracts – worth about $1.3 million – after it discovered bags of stones instead of the nickel that underpinned a handful of its contracts at a warehouse in Rotterdam.

JPMorgan was the owner of the nine invalidated contracts, according to people familiar with the matter.

The “irregularities” all occurred at one warehouse owned by Access World (which was owned by Glencore at the time of the purchase).

Access World said it is inspecting the “warranted” bags of nickel briquettes at all its locations, but believes that the issue that led to the nine warrants being suspended “is an isolated case and specific to one warehouse in Rotterdam.”

The discovery has set off a wider scramble across the metals world, with warehouse companies racing over the weekend to re-inspect and re-weigh thousands of tons of metal after the LME asked them to verify all the nickel currently on warrant.

“LME warehouse warrants used to be the gold standard of warehouse warrants around the world, treated as a near-cash equivalent,” John MacNamara, chief executive officer of Carshalton Commodities Ltd. and a veteran commodity trade finance banker, wrote on LinkedIn.

“Something has gone horribly wrong at the LME.”

To be clear, there’s no suggestion that JPMorgan did anything wrong… it’s just another embarrassment.

Yes, we know Jamie Dimon agreed to dump some of JPM’s excess deposit cash into First Republic (but to be frank, firstly, it was cash he got as depositors bailed from regionals; and secondly, he knows its guaranteed by The Fed no matter what size it was)…

…and now FRC has crashed to a new record low – not exactly great work on the ‘bailout’ front.