Probes piling up for JPMorgan

The banking giant is getting battered from all sides by investigations. But while the stock is down in August, investors are still way ahead this year.

By Charley Blaine Aug 20, 2013 4:30PM
JPMorgan Chase CEO Jamie Dimon © Joshua Prezant/Bloomberg via Getty ImagesIf you're interested in good press, JPMorgan Chase (JPM) hasn't been getting much lately. The stock hasn't been much of a performer this month, either. Shares are off more than 6%, but they may be a buy.

The banking giant faces continuing scrutiny and criminal investigations over that $6 billion "London Whale" trading loss in 2012. Two executives involved in that mess now face charges that they understated the losses the bank faced.

The Securities & Exchange Commission is looking into whether JPMorgan's hiring of the children of prominent Chinese officials helped the banking giant win more business in China. It's not clear, however, that hiring the children of any high-ranking official anywhere is illegal.

The company also faces a probe over alleged manipulation of electricity markets. It has already agreed to pay $410 million to settle allegations by the Federal Energy Regulatory Commission that the bank manipulated markets in California and the Midwest.
Oh, and some folks in South Carolina are mad. The bank is shutting down a Florence, S.C., office that handled mortgage renegotiations and refinancings. In January, the office employed 1,300. The bank's explanation: Mortgage problems are declining, and there isn't enough work for the office.

In all, The Wall Street Journal noted, JPMorgan Chase is the subject to at least seven probes right now. Whether all the probes will result in charges, fines or whatever is unclear. Often, a probe starts with some noise and ends quietly.

Bad publicity is probably the norm for any big bank, especially since the 2008 financial crisis. Many of them have deserved it, including JPMorgan. The London trading loss was embarrassing for its size and for the incompetent management of its operation. Even CEO Jamie Dimon (pictured above) conceded the point.

But the piling up of scrutiny all at once is unwelcome for JPMorgan, an organization that prides itself as one of the best-managed financial companies in the world. The bad press threatens to slowly strip away that veneer of brilliance. Whether it results in anything really big is questionable. Analyst Dick Bove told CNBC Tuesday he believes the ultimate goal of all these probes ultimately is to break the company up.

All that said, the stock may be down for reasons entirely divorced from all these probes. Stocks aren't having a good month. Interest rates are rising, and stocks are sensitive to interest-rate swings.

The Dow Jones Industrial Average ($INDU) is having its worst month since May 2012, although the loss so far is a modest 3.2%. The 2% pullback for the Standard & Poor's 500 Index ($INX) is potentially its biggest monthly decline since October.

Financial stocks are up just 0.6% for the month, fifth worst among the sectors of the S&P 500.

Despite JPMorgan's decline this month, company is big, with $2.4 trillion in assets and still very profitable. Second-quarter net income was up 31% from a year ago. Earnings for the year should be up 14.2% from a year ago. Revenue for 2013 may hit $100 billion for the first time.

The shares are still up nearly 19% on the year, better than the gains for the Dow and the S&P 500. The shares are up nearly 69% since the bottom after the London Whale debacle was first announced.

And yet, they may be a bargain. The relative strength index for the stock is at 32; a reading at 30 or lower suggests the stock is oversold. On Tuesday, the shares moved up 50 cents to $52.30. In the process, the stock bounced off the trend line that had been in place since June 2012.

Plus, the shares are selling at 8.7 times trailing earnings and 8.4 times forward earnings. Hardly pricey.

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41Comments
Aug 20, 2013 6:34PM
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Just like all of the other to big to be allowed banks, JPM should be broken up.  When Ma Bell was broken up, good things happened.  Too big business is bad business, just as too big govt is bad govt. 
Aug 20, 2013 5:29PM
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JP Morgan shot themselves in the foot, so why should America care what happens to them now?
Aug 20, 2013 6:46PM
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The real estate between banks and the guberment is becomming less and less.  I see a quasi guberment quasi private relationship.  I believe this is a somewhat secret relationship we can only guess about. You have to keep your eye on how the furniture is moved around to have a clue.  I don't like this present plan.  Somehow it kind of stinks. You have to always question authority.  We need to ask just what their relationship is.  It is just too goofy for me to trust what these cats are up to.
Aug 20, 2013 8:48PM
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Don't stop until this corrupt Ivory Tower topples!
Aug 21, 2013 3:48AM
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Excellence is punished.
Mediocrity is rewarded.
And dependency is to be revered.
This is present day America.
When people rob banks they go to prison.
when banks rob people they get bailed out!!!!!
When the government robs the taxpayer they get re-elected.
IN GOD WE TRUST
Aug 20, 2013 7:06PM
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The root of the problem is the U.S. Gov. meddling in the private sector economy.  J. P. Morgan along with G M, Chrysler, AIG,  to name a few knows they will be bailed out by the U. S. taxpayers hard earned money for their "screw ups" 
Aug 21, 2013 8:44AM
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Just as big  government becomes to bloated and mismanaged so it is with these "Too big to fail banks"Dimon should be out ,and JPM being rife with corruption and fraud  should be reorganized and broken up into smaller entities. Time to reinstate Glass Steagall
Aug 21, 2013 8:21AM
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The article dosen't tell you the biggest probe is the manipulate of the gold and silver market. That will bring JPM down if they could prove they are one of the banking ponzi scheme to control the dollar from falling. Everyone knows that silver resource will be the first nearly depleted by 2020. Silver is used over 60% industrial used and never recycle because it's to low in price per ounce. Nearly most of all the silver mining operations is shut down because of the cost factor is not enough to make a profit. So the world needs almost 900 million ounces a year to all suppliers  that makes our cellphones.computer,solar panels,medical instruments,polyester clothing etc. Everyone also knows their only two true wealth of money and that's gold and silver and silver will no longer be plentiful starting as soon as 2015-2016. The experts estimate that silver should now be around $750-850 an ounce now. and by 2020 it should be 1:1 ratio with gold. According to experts it going to be the greats wealth in history of mankind.That's big time and also the crash of dollar makes it important for the powerful and rich people to control gold and silver prices.     
Aug 20, 2013 8:32PM
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JP Morgan haven stolen WAMU with the help of the FDIC. I can hardly feel sorry for the thief's. Having just paid off my mortgage with the thefts,I will have nothing  to do with the thief's  ever again.  Supposedly Jimmie is a genius in the banking industry. People had better wake up and especially the regulators, Hello FDIC!!!  
Aug 21, 2013 12:38AM
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Old ROBBER BARON money. Time for them to eat FECAL matter then go away. They have RIPPED off the AMERICAN PUBLIC long enough. GOOD RIDDANCE...
Aug 20, 2013 7:46PM
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In my opinion, anyone who owns JPM stock is just as guilty as the company itself. If you are profiting on their stock shame on you. They are all crooks and their profits are like stolen money which makes you just as guilty. I just wish they had let them fail in 08. We would be better off today.

Aug 21, 2013 7:40AM
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"The stock hasn't been much of a performer this month"

Why does everyone think that a stock has to go up every month, every quarter, every year? By this type of reasoning, since Banʞ of Ameriʞa has been around so long, their stock should be trading at several million dollars a share. Also, how do companies and Wall Street analysts expect people to invest in the stock market if they're not paid decent wages? It's this type of extreme greed mentality and thinking that got this country into so much financial trouble.
Aug 21, 2013 10:18AM
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Hey Fat Cat ! It takes one to know one ! Your DEAD MEAT !
Aug 20, 2013 6:54PM
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Shame on you Charlie-JPM appears to be overwhelmed by bums, despite Dimon's halo.  Value or not, you just do not invest in entities with a history of devious behavior.  Otherwise they are rewarded for same.
Aug 21, 2013 8:06AM
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I'm putting 4 to 1 that none of the charges go through.... Who's taking?   There's no way Obama will let them take a hit.  They will wave their magic wand of power over his head, and he will put his tail between his legs.  Just like he did with the last Wall Streed debocle.  At most maybe a fine or 2, but I can guarantee no jail time... It's not illegal to betray investors anymore.
Aug 21, 2013 9:24AM
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Such a laugh that JPM closed an office that does refinancing and mortgage modifications.  I know about 20 people who have tried to refinance or get a modification from Chase and the people they had to deal with were either incompetent or told to act that way to avoid having to assist customers.  And, what about the $14 billion in oil futures Chase holds?  Maybe they are attempting to manipulate the price of oil too?  You think? 
Aug 21, 2013 9:32AM
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To the (TBTF) To Big To Jail !  DIE J.P MORGAN CHASE  DIE  !
Aug 21, 2013 9:04AM
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Dimon's position seems to be as strong as ever.  Sh#t never flows up hill.
Aug 21, 2013 10:32AM
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The crooks-bankers and the Fed are taking the tax payers to bankurptcy. 5 years of free money for the banks are getting and no one cares. The Fed is buying $80,000,000,000 of bonds a month . Where are they getting this money from??? 
Aug 20, 2013 7:25PM
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The "wizard" of all investors has been a "charleton"....now, who said that?  He needs to go down as that and that alone. Buffet this...and, this buffet is just beginning if the SEC had any "guts" at all.  What a total con he is and has been. Get a clue people. He will just make a phone call or two and dissolve himself from any involvement.  Same people that are "sheeples" to him and do this bidding and that includes the SEC.  Bite it.  The bite back may be one heck of a lot worse 'ol man.....SEC.      
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