Did JPMorgan CEO break the law?
The mega-bank's stock is plunging, its reputation has been battered, and now the Justice Department is investigating whether it committed a crime.
JPMorgan Chase (JPM), the country's largest bank, continues to reel from its $2 billion trading loss last week, which critics are touting as evidence that Wall Street is still making the types of dangerous bets that caused the financial crisis in 2008.
JPMorgan Chase's stock plunged by nearly 10% the day after CEO Jamie Dimon disclosed the loss, erasing $13 billion from the company's value. Dimon, one of the loudest voices against government regulation of Wall Street, has been pilloried in the press for what he has described as a "terrible, egregious mistake." And now the Justice Department is investigating whether the controversy involved more than mere blunders, raising the prospect that the bank or its executives could be charged with violating securities laws.
Did Dimon do anything illegal?
Dimon might have misled shareholders: When news reports shed light on the bad bet a month ago, Dimon dismissed them, saying they were nothing more than a "tempest in a teapot," says Peter J. Henning at The New York Times. It's illegal for executives to make false or misleading statements about "material information" to shareholders, and Dimon's "reassuring statements may have given an increasingly false sense of security to investors about JPMorgan's risk management." Federal investigators will have to figure out what Dimon knew about the trade, and when he found out it had gone sour.
Dimon messed up, but he didn't commit a crime: "We appear to be on the verge of making it a crime for a business to lose money," says Jonathan Macey at The Wall Street Journal. JPMorgan's loss is no one's business but its "stockholders and a few top executives and traders who will lose their bonuses or their jobs." Instead of cracking down, the government should trust that a profit-seeking entity like JPMorgan will "learn from this experience and do a better job" next time. Instead, the government is exploiting the controversy to increase its "power and influence."
But this is hardly the bank's first offense: Dimon's JPMorgan has "systematically engaged" in legally dubious practices for years, says Richard Eskow at The Huffington Post. The company has "paid out billions to settle charges" that include bribery, corruption, perjury, forgery, investor fraud, and more. JPMorgan's "vast wealth" means lawsuits are nothing more than the cost of doing business in a "corrupt political system," which has failed to actually prosecute any executive connected to the financial crisis. What a shame.
More from The Week
No more bail outs ever especially for these institutions that are considered too big to fail. Let them and all there investors go broke. NO more TAXPAYER Bailouts ever again for anyone.
Jonathan Macey's of the WSJ is we should "TRUST" that these so called multi billion dollar "MISTAKES" are "NO ONE'S" business on the outside and these companies will "LEARN" from their mistakes. ( And what, "Promise they will be good and never do it again ! ) Give me a break.
If I was running the WSJ, I would be sure to find another position for Mr. Macey.
The only language guys like mr. Dimon understand is money.If you want them to be more responsible for their companies actions "FINE him" and his company, "Big time"
They want big time bonuses when their company does well. The pedelum swings both ways. Take away from their compensation package a fair percentage ( 10 % ) of every loss over a specified amount.
Don't you think more attention would be paid with these type investments if there is a chance a loss would hit "THEIR" individual pocket book !!!
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Like many companies this winter, the fast-food giant blamed a drop in same-store sales on the weather. But could its problems be bigger than a snowbank?
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.