Bonus Crash: JP Morgan Traders Exodus

There are a lot of disgruntled traders on J.P. Morgan floor. Industry experts are actually predicting that some senior J.P. Morgan fixed income traders may actually leave the company for other hedge funds within the next few months. J.P. Morgan has warned that sales for fixed income trading revenues will be down by 20%. This is only continuing a trend of year-over-year losses; however, this is not the only reason that J.P. Morgan traders are looking for the exits.

The employee benefit trust fund for J.P. Morgan senior traders has now been closed. Traders have become used to the benefits of the EBT in its two decades of operation. It was a means for the senior traders of J.P. Morgan to easily move money offshore, reducing their tax burden and creating a financial haven for them. With lower bonuses and higher taxes hitting at the same time, some people who are working for J.P. Morgan may have to change a lifestyle.

On top of this, it was reported that the government was actually exercising law to make senior traders pay money on taxes that they had avoided through the employee trust in past years. Although they were given a substantial amount of time to do so, it was still a jolt to many of the financial packages of senior J.P. Morgan traders. Most of the traders actually had to be offered financial packages by the bank in order to keep from declaring bankruptcy.

The government is also coming down hard on the ability of those traders to make money back. With much stricter risk limits and less prospects for large profits, senior traders are finding their overall opportunities much weaker than in past years. Some traders simply believe that there is no point in sticking around anymore if there is no opportunity that presents itself. J.P. Morgan is no longer a tax efficient investment of time according to these people, especially since the cash benefits from the employee trust have already been distributed.

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