J.P. Morgan Entering Phase Two of its Regulatory Nightmare
J.P. Morgan Chief Executive Jamie Dimon issued a stark warning to investors back in May: while the congressional hearings are over, the regulatory fallout from the $6.2 billion “London Whale” trading fiasco was nowhere near complete. Indeed, it looks like it’s just getting started.
The Securities and Exchange Commission is planning to file civil charges against the J.P. Morgan and, in breaking an industry precedent, will reportedly look to force the bank to publicly admit to wrongdoing for its lack of risk control. Historically, banks facing civil charges have been able to pay fines while neither accepting nor denying culpability. SEC Chairwoman Mary Jo White signaled earlier this year that that tradition would no longer be recognized, although the regulator has yet to use its newfound power.
Being required to admit to wrongdoing may sound harmless, but the act has more effect than you may think. First off, it’s a black eye for management, which is still recovering from the public beating it took in Washington throughout the last year. But more importantly, it could open the bank up to potential lawsuits from investors.
One person who appears to be in the clear, rather ironically, is the very man who was largely responsible for the damage. Bruno Iksil, the former J.P. Morgan trader whose fingerprints were on the outrageously-sized derivatives bets, likely won’t face charges for his role, according to the Wall Street Journal.
In addition to the “London Whale” fallout, J.P. Morgan is now being investigated for selling shoddy mortgage securities, among other legal woes.
Ten Hottest Cities (eFinancialCareers)
You wouldn’t know it by all the news clippings, but financial services is one of the hottest job sectors in the U.S. Here are the 10 cities that are doing the most hiring.
They’re All Winners (Bloomberg)
As far as the market is concerned, it may not matter who replaces Ben Bernanke as the chairman of the Federal Reserve. Equities are likely to spike either way.
Exodus Looming? (eFinancialCareers)
Steven Cohen’s attempts to reassure staffers at SAC Capital that their jobs are safe don’t seem to be working. Firms like BlueCrest Asset Management, Citadel and Balyasny Asset Management appear primed to poach front office workers from the beleaguered hedge fund.
If At First You Don’t Succeed…(NY Post)
A former examiner at the Financial Industry Regulatory Authority who was fired for sexual harassment last year had no interest in walking away from her job. Ling Chan applied to the regulator 574 times using 150 different aliases, all the while sending menacing threats to her former HR head, including signing him up for unwanted pornography subscriptions.
These Guys are Good (Bloomberg)
Traders at Goldman Sachs posted losses on six days during the second quarter. They booked more than $100 million in profits on 10 days.
Opportunity Knocking (Financial Times)
American citizens living in the U.K. are being turned away by large British banks frustrated with newly-created, extremely complex tax rules for U.S. expats. A number of specialist firms have been stepping in and stealing the business.
Buzz Around the Office
NHL Hall of Famer Doug Gilmour, currently the general manager of the Ontario Hockey League’s Kingston Frontenac, made an eyebrow-raising moving this week, trading his own son, Jake, for quite literally nothing.
List of the Day: Difficult Questions
In interviews, the hardest questions are often those without “correct” answers. Here are three of the toughest. Practice answering them before your next interview.
- What is your biggest weakness?
- What didn’t work in your last position?
- Why is there a gap in your employment record?
