JPMorgan Slammed With Official Justice Department Inquiry
The U.S. Department of Justice has launched a criminal investigation into JPMorgan’s (NYSE:JPM) $2 billion trading loss, according to a Washington Post report citing a law enforcement source familiar with the situation. The inquiry is reportedly at a very early stage, as it is still unclear what, if any, laws may have been violated.
The news comes as chairman and CEO Jamie Dimon and the rest of the bank’s board face questions from shareholders about the same losses, as well as its lobbying on new financial regulations and Dimon’s post on the Federal Reserve Bank of New York’s board.
JPMorgan’s annual shareholder meeting today began with Dimon speaking rapidly about the bank’s trading loss, admitting the mistakes were “self-inflicted” and that they should “never have happened.” The multi-billion dollar loss has many concerned about regulators’ abilities to monitor banks making risky, complex trades.
Shareholders at today’s meeting in Tampa, Florida, voted on various proposals, including one that would split the roles of chief executive and chairman, which did not pass.
During a question-and-answer session, Dimon was pressed by one shareholder on reports the bank was lobbying to water down regulations, including one rule that would force banks to spin off trading operations that exist primarily to pad their own profits. Dimon said JPMorgan supports “the intent” of the rule, named after Federal Reserve Chairman Paul Volcker, but said the “strong, simple, good regulation” that JPMorgan advocates isn’t “simply a question of more or less” oversight.
Treasury Secretary Timothy Geithner said earlier today that JPMorgan would be the subject of increased regulatory scrutiny, and warned that an official probe was imminent. He said JPMorgan’s loss strengthens the government’s case for financial regulation. Regulators are “going to take a very careful look at this incident,” said Geithner.