The Justice Department initiated a criminal probe on Tuesday into the $2B trading loss that JPMorgan Chase announced last week. The Post’s Jia Lynn Yang and Sari Horwitz report :
The Justice Department has initiated a criminal probe into the $2 billion trading loss at JPMorgan Chase, according to a law enforcement source familiar with the situation.
The inquiry is at a very early stage, said the person who spoke on condition of anonymity since the matter is private. It is unclear what laws may have been violated. Dean Boyd, a Justice spokesperson, declined to comment.
The news came as Jamie Dimon, the embattled chief executive of JPMorgan Chase, faced questions from shareholders Tuesday about the company’s recent $2 billion trading loss, its lobbying on new financial regulations and Dimon’s post on the Federal Reserve Bank of New York’s board.
At the company’s annual shareholder meeting Dimon won an “endorsement of his pay package last year” and gets to keep his chairman title, the Associated Press reports :
The CEO of JPMorgan Chase survived a shareholder push Tuesday to strip him of the title of chairman of the board, five days after he disclosed a $2 billion trading loss by the bank.
CEO Jamie Dimon also won a shareholder endorsement of his pay package from last year, which totaled $23 million, according to an Associated Press analysis of regulatory filings.
Dimon, unusually subdued, told shareholders at the JPMorgan annual meeting that the company’s mistakes were “self-inflicted.” Speaking with reporters later, he added: “The buck always stops with me.”
Most of the shareholder ballots were cast in the weeks before Dimon revealed the trading loss.
His pay package passed with 91 percent of the vote. The vote to strip him of the chairman’s title won only 40 percent support. The bank did not announce separate results from before and after the loss was revealed.
Dimon was confronted at the meeting by shareholders upset about the trading loss, which has rattled investor confidence in the bank and complicated JPMorgan’s efforts to fight tougher regulation of Wall Street.
Rev. Seamus Finn, representing shareholders from the Catholic organization Missionary Oblates of Mary Immaculate, said that investors had heard Dimon apologize before for the foreclosure crisis and other problems.
“We heard the same refrain: We have learned from our mistakes. This will never be allowed to happen again,” Finn said. “I can’t help wondering if you are listening.”
Lisa Lindsley, director of capital strategies for an influential union of public employees that is also a major JPMorgan shareholder, said independent board leadership was in shareholders’ best interest.
“An all-powerful CEO is his own boss,” she said. “Looking for an infallible CEO is a fool’s errand.”
Investors have pummeled JPMorgan’s stock price since the loss was revealed. The stock 12 percent in two trading days and lost almost $20 billion in market value. It bounced back on Tuesday, rising 3 percent.
Treasury Secretary Timothy Geithner said Tuesday that JPMorgan’s “blunder.” helps make the case for tougher rules, The Associated Press reports :
Geithner said that the Federal Reserve, the Securities and Exchange Commission and the Obama administration are “going to take a very careful look” at the JPMorgan incident as they implement new regulations like the so-called “Volker Rule,” which bans banks from making bets with firm money.
“The Fed and the SEC and the other regulators — and we’ll be part of this process — are going to take a very careful look at this incident of course, and make sure that we review the implications of what that means for the design of these remaining rules,” Geithner said at a Washington event hosted by the Peter G. Peterson Foundation.
Under review will be “not just the Volker Rule, which is important in this context, but the broader set of safeguards and reforms,” he added.
Geithner said that regulators will also examine capital requirements, limits on leverage and reforms in the derivatives markets.