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This profile was last updated on 1/15/15  and contains information from public web pages and contributions from the ZoomInfo community.

Mr. Joseph Jett

Wrong Joseph Jett?

Fund Manager , Joseph Jett Hedge ...

Kidder , Peabody & Co.
10 Hanover Square
New York , New York 10005
United States

 
Background

Employment History

Board Memberships and Affiliations

Education

  • M.I.T.
  • Harvard MBA
  • M.B.A. degree
    Harvard Business School
  • MIT undergraduate degree
  • bachelors Degree , chemical engineering
    Massachusetts Institute of Technology
  • bright Harvard graduate , Wall Street firm
    Kidder Peabody
  • master's degree , chemical engineering
    Massachusetts Institute of Technology
124 Total References
Web References
CSC.LLC - Another Business for the Big Five
www.chapmanspira.com [cached]
Joseph Jett, a young trader at Kidder Peabody, an old line Wall Street Company, was directly responsible for sending his firm into oblivion. A series of nonexistent electronic transactions threw Kidder's books into such disarray that auditors still have not been able to trace his transactions with any degree of assurance.
Library - PINEBASE
www.pinebase.com [cached]
Kidder, Peabody & Co. - Joseph Jett
Hired as a government bond trader specializing in STRIPS arbitrage trading, Jett duped the computing system at Kidder Peabody by continuously forward rolling the loss-leading trades to make them appear as if he made tremendous gains. When the settlement occurred, the trades recorded massive losses.
Reported Loss - $85.415 million Joseph Jett's False Trade (Investopedia) Kidder Scandal Tied to Failure of Supervision (NY Times)
In 1991 Kidder, Peabody & Co. ...
gradestack.com [cached]
In 1991 Kidder, Peabody & Co. hired Joseph Jett to their Strips trading desk In his first 6 months the desk did not make money, then reported profits grew quickly ($32 Mn in 1992, $151 Mn in 1993, and $81 Mn in the first quarter of 1994) Jett was Kidder's "man of the year" in 1993 and was awarded a $9 million bonus (his boss received a $20 Mn bonus in 1993, primarily for overseeing Jett's activities)
...
Kidder and GE shareholders brought suit against Jett for fraud, but it was impossible to prove because Jett was openly engaged in his trading fraud Compensation is an imperfect signal of competence Credentials are imperfect signals of competence. Joseph Jett had an MIT undergraduate degree and a Harvard MBA.
Serious Play « Isegoria
www.isegoria.net [cached]
In 1991, Kidder hired Joseph Jett to arbitrage treasury bonds and STRIPS (separate trading of registered interest and principal of securities, i.e., bonds stripped of their coupon payments). Such arbitrage is theoretically a riskless transaction and would thus not need to be tracked by Kidder's standard market and credit risk management systems. The firm relied on a computerized expert system that allowed traders to model and simulate their trades in accordance with software rules about valuing such transactions in the bond market. The software also automatically updated the firm's inventory, position, and profit-and-loss (P&L) statement. In keeping with market conventions, the system valued the STRIPS lower than their associated bonds. This difference was reflected in the firm's P&L statement, which was also the basis for assessing trader bonuses. By entering into forward transaction on the synthetic STRIPS, Jett was able to defer when the actual losses were recognized on the P&L statement by taking up still larger positions in STRIPS and then digitally reconstituting synthetic STRIPS already in the system.
In 1993 Jett enjoyed STRIPS profits in excess of $150 million; he received a $12-million bonus and the chairman's "Man of the Year" award. By March 1994, when Jett's positions included $47 billion worth of STRIPS and $42 billion worth of reconstituted STRIPS, Kidder management decided to figure out Jett's secret. A month later, the firm announced that Jett had falsely inflated his profits in excess of $350 million. He was fired and sued for fraud.
Risk and risk management « naked capitalism
www.nakedcapitalism.com [cached]
Barings' Nick Leeson and Kidder Peabody's Joseph Jett were both traders who exploited accounting weaknesses and whose actions led to the demise of their firms.
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