In wake of $2 bil loss on a single bet by Mr.Iksil at JP Morgan I would like some clarification on proprietary trading practices at our too big to fail banks and the safety of custodial account money.
According to Bogleheads Wiki on Vanguard Safety:
http://www.bogleheads.org/wiki/Vanguard_safety
So our invested money is held in a JP Morgan custodial account. To reiterate the question, would JP Morgan be able to perform proprietary trading (or something similar, but not called that) with our custodial account money?By contrast, Vanguard (and every other US-regulated mutual fund company) must custody their assets with a third party. All of the funds managed by Vanguard have their assets held with JPMorgan Chase.
If so, what's there to prevent our hard earned dollars from falling into hands of gambling traders.
http://blogs.reuters.com/felix-salmon/2 ... s-blow-up/Felix Simon [Reuters]:
Whenever a trader has a large and known position, the market is almost certain to move violently against that trader — and that seems to be exactly what happened here. On the conference call, when asked what he should have been watching more closely, Dimon said “trading losses — and newspapers”. It wasn’t a joke. Once your positions become public knowledge, the market will smell blood.
Does anybody know who are the custodians for Chuck Schwab and/or Fidelity?
(seriously concerned) Andrew