JPMorgan Chase sacked the head of its government debt trading desk and another employee after they allegedly circumvented the bank's compliance procedures following a disagreement in valuing certain trades, said people familiar with the matter.
Andrew Lombara, then head of US Treasury trading at the bank, and Chi Lee, a junior Treasury trader, both left the bank in early January but the reasons for their departure were not disclosed publicly.
The traders and the bank's valuation committee disagreed over the amount of reserves taken for certain Treasury trades known as strips, the Financial Times has learnt.
The JPMorgan traders wanted to increase the size of the reserve and went around the valuation committee to do so, said people familiar with the matter. JPMorgan believed this subsequent move violated internal bank procedures and fired the traders, they added.
In filings submitted to the Financial Industry Regulatory Authority (Finra) on January 8 about each man, JPMorgan wrote: "The Firm determined that the employee did not adhere to certain control processes."