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.

By TheWeek.com May 15, 2012 5:20PM

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

Tags: JPM
May 15, 2012 6:11PM
The Administration has done absolutely nothing to curtail this behavior. No CEOs were punished for the 2008 crash and they are still gambling. Glass-Stegall must come back - Stop the Insanity with our banking institutions!
May 15, 2012 7:51PM

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.

May 16, 2012 7:02PM
Mr. Macey of WSJ may well be incorrect in stating tha the lossest "it is only the business of the company and its people" .  However if a recent article in Business Week is correct that 56% of our economy is in the 5 biggest banks,  this blatant wagering for more profits through vehicles very few understand is putting at risk more than just the profits of a single company, but the very survival of our economic existence in this country.  We have, through our own actions, put our economic future in the hands of too few.  It's a shame it has to likely lead to more regulation, but if the "ones that hold the gold" are only in it for more for themselves, woe likely  be unto us all.  We had a warning in 2008.  We have another with this episode.  As the old song from the 60's said...."When will we ever learn?"
May 17, 2012 10:15AM

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 !!!

May 16, 2012 4:00PM
It does not matter as Holder, the AG, is a political "hack" for Barry and no one will ever go to jail from the scumbag crooks fraternity in the financial and banking industries. Amazing how Barry looks the other way when it is politically advantageous to do so. 
May 16, 2012 12:34AM
An economic depression is coming, what we are seeing is just the preambulus of what is to come, here, there and everywhere, this people created their own schemes that only they may understand, for what I read everyday, hyperinflation, deficit growing and job creation anemic, whatever, whatever, whatever is just the beginning of a disease, probably the end of an era, ideology and way of thinking. Corruption, high severance packages of outreageous amounts, the 99% tale, resentment, inconformity...its the end of an emporium and empire, this acts of corruption, descarate and repeated over and over again mean nothing else but the graveyard of an economical system.
May 16, 2012 8:10AM
Obama again making a problem where there is none. Anything for a vote.
May 16, 2012 1:17PM
Dimon is a Democrat.  Does that give you some ideas on why he's not in more trouble?
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