The CIO’s job was to invest the bank’s idle cash while minimizing risk. Iksil agreed that his positions acted as a bullish credit bet, “but that’s why I tried sending this P&L,” he said, using industry shorthand for a profit-and-loss statement. “It’s lagging so much that actually we have to show loss, and I explained that that this is a lag that keeps going, that amounts to a potential of 800 bucks, right, that --”
“What are you saying, Bruno? What are you talking about?” Martin-Artajo said. “You’re losing your mind here, man.”
“This is just what we need to explain tomorrow, you don’t need to in the e-mail, man,” Martin-Artajo said. He expressed concern that Drew would stop them from expanding the bets, and that JPMorgan’s investment bank would get involved because employees in that unit took the opposing side on some of the trades, wagering that Iksil’s strategy would fail.
“That’s what you fear, right? That at some stage we are in a corner because no one wants to go on with this challenge with the IB, yes?” Iksil said, referring to the investment bank. “My logic is strange but in fact, I have to choose between one bad thing and one thing that I think was worse.”
“I’m not going to sugar coat things,” Martin-Artajo said, adding that he was trying to “get all the facts” for Macris and Drew. “It’s just that I um, [expletive], I wish, I don’t know, just explained this a little bit better,” Martin-Artajo said.
He had a call earlier that day with Daniel Pinto, co-head of the fixed-income unit in the investment bank, with whom he raised concerns later that week that the unit’s traders were marking positions unfairly against the CIO. The more losses Iksil had to recognize, he said, “the harder it is to settle with the IB at a better price, if that’s what’s going to happen.”
Later in the call Martin-Artajo asked, “Everything else okay? You tired, you okay, man? You tired, are you sleeping well?”
“The discussion with Achilles, you know he tried again the question I have, do I miss something? Did I miss something? And I did feel, you know, unsettled by his questions,” Iksil said. “I feel bad. If I do know that I know I’m not making your life any easier, and if --”
“No, no, no, you know I think that you’re an honest guy, you know, it’s just that I did not want you to do this way, but you know, you feel that the bid-offer spreads are giving you a headache,” Martin-Artajo said. “Let’s go and relax a little bit if you can, and let’s start tomorrow, and we’ll start again.”
“There’s not a lot we can do on the phone.”