May 21 (Bloomberg) -- Irvin Goldman, who oversaw risks in the JPMorgan Chase & Co. unit that suffered more than $2 billion in trading losses, was fired by another Wall Street firm in 2007 for money-losing bets that prompted a regulatory sanction at the firm, Cantor Fitzgerald LP, three people with direct knowledge of the matter said.
JPMorgan appointed Goldman in February as the top risk official in its chief investment office while the unit was managing trades that later spiraled into what Chief Executive Officer Jamie Dimon called “egregious,” self-inflicted mistakes. The bank knew when it picked Goldman that his earlier work at Cantor led regulators to penalize that company, according to a person briefed on the situation.
JPMorgan’s oversight of risk in its chief investment office has become a focal point as U.S. authorities examine the incident and lawmakers debate how to prevent banks from making wagers that might endanger depositors. Goldman was given the risk-oversight job after his brother-in-law, Barry Zubrow, 59, stepped down in January as JPMorgan’s top risk official to become head of corporate and regulatory affairs, according to a person briefed on the matter.
Less than a week after the loss became public, the bank stripped Goldman of his duties, though he remains at the firm, according to a person familiar with the situation. Chetan Bhargiri was named to succeed him.
The Cantor case culminated in 2010 when the enforcement arm of NYSE Arca Inc. fined Cantor $250,000 after finding it failed to supervise Goldman, 51, who was buying and selling the same stocks in personal accounts that he traded in a proprietary account at the New York-based brokerage. His stock investments, one of which plunged in December of 2006, presented a conflict of interest that could have affected his investment decisions, NYSE Arca found, according to a settlement document on its website.
Cantor settled the case without admitting or denying wrongdoing. The NYSE document identified Goldman only by his former title as CEO of debt capital markets at Cantor, and he wasn’t directly accused by the watchdog of misconduct. People with knowledge of his dismissal spoke on condition of anonymity because the reasons for his departure were private.
Kristin Lemkau, a spokeswoman for JPMorgan, declined to comment on Goldman’s actions at Cantor or the bank’s decision to put him in charge of risk management. Goldman didn’t respond to messages seeking comment.
JPMorgan is investigating whether anyone at the firm sought to hide trading risks, people familiar with the matter have said. It hasn’t found that Goldman did anything improper, one person said.
Goldman’s resume lists more than a decade of work in trading and investments before he was appointed to be risk chief. He spent 13 years at Credit Suisse First Boston and ran sales and trading for interest-rate products, according to a 2003 statement on Cantor’s website.
That year, he joined Cantor as president of debt capital markets and asset management as the firm sought to rebuild from the Sept. 11 terrorist attacks on the World Trade Center, which killed 658 of its 960 New York-based employees.
After leaving Cantor, he joined JPMorgan’s chief investment office as a trader, according to two people. As the NYSE inquiry at Cantor progressed, he went on administrative leave at JPMorgan, one person said. His trading book was down around that time and his departure helped result in a loss of about $10 million to $15 million, the person said. The Wall Street Journal reported that loss yesterday on its website.