In a widely-expected move, J.P. Morgan agreed to a massive $920 million settlement related to its poor handling of the “London Whale” trading debacle. What was less sure was whether the bank would be required to admit to wrongdoing and acknowledge its faulty internal controls. It was, and it did.
The ire of regulators was directed at J.P. Morgan’s executive team, some of whom are still gainfully employed at the firm. “JPMorgan’s senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company’s problems and determine whether accurate and reliable information was being disclosed to investors and regulators,” George S. Canellos, co-director of the SEC’s Division of Enforcement, said in the statement. Executives didn’t update the board’s audit committee on the losses before the first-quarter earnings, according to the settlement.
Historically, banks facing civil charges have been able to pay fines while neither accepting nor denying blame. J.P. Morgan wasn’t given that courtesy, acknowledging that the trading losses "occurred against a backdrop of woefully deficient accounting controls.” Those are strong words for a public company to use, leaving them open to litigation if shareholders feel the need.
The enforcement action leaves a stain on Chief Executive Jamie Dimon’s legacy, but he is unlikely to go anywhere soon. Dimon doesn’t expect the bank or any executives to face criminal charges, even though authorities are still looking into that possibility, according to the New York Post.
Ironically, J.P. Morgan was greeted with a bit of good news on its day of gloom. The firm retained its crown as the top investment bank on Wall Street, leading the league tables in all three categories: fixed income, equities and advisory revenue. That’s why Jamie Dimon still has a job.
Tips For Nailing Panel Interviews (eFinancialCareers)
Panel interviews have become more routine in recent years as Wall Street has worked to become more efficient with its time. Needless to say, they can be nerve-racking.
Another Glitch (WSJ)
Goldman Sachs was unable to complete a $30 billion order for U.S. treasury bills due to, you guessed it, another technology glitch. At least this malfunction wasn’t on Goldman’s end, so no one else will be asked to retire. The bank was allotted additional six-month T-bills as restitution.
In Your Face (Bloomberg)
Pimco head Bill Gross has had a tough summer dealing with the lousy bond market and a rush of asset withdrawals, so you can’t blame him for boasting after his call on short-maturity Treasuries came up smelling like roses. “Not braggin’ but what did we tell you?” Gross said on Twitter. You certainly did, Bill.
Equity Cuts (DealBreaker)
Bank of America reportedly took the knife to its equities unit, cutting an unknown number of traders. BofA has done this a few times already this year.
RIP (All Things D)
Joy Covey, the former chief financial officer of Amazon.com, died Wednesday following a bike accident in Silicon Valley.
‘Ferocious’ Response (Business Insider)
Not often do 26-year-old analysts move markets and infuriate multi-billion dollar CEOs, causing them to call impromptu conference calls. But that’s exactly what just happened. Hedgeye Risk Management senior energy analyst Kevin Kaiser, just three years out of Princeton, sent a controversial note to clients suggesting they short Kinder Morgan, North America's largest oil and gas pipeline and processing company. They did – in droves – knocking $4 billion from the company’s market cap. Kinder Morgan's CEO Richard Kinder was not pleased.
America Rules (FIN Alternatives)
U.S.-based hedge funds now account for a whopping 73% of global assets under management. U.S. firms have added roughly $150 billion in assets year to date. European hedge funds have added just $33 billion.
Buzz Around the Office
Avast Ye Matey
If you were walking around dressed as a pirate yesterday and didn’t visit a Krispy Kreme, well you missed out. The chain was giving away free donuts to anyone who was wearing any three of these items: pirate hat, bandana, eye-patch, costume hook, pirate shirt, peg-leg, parrot and knickers. Sounds like a lot of effort frankly.
List of the Day: Getting Home On Time
Leaving the office at the end of the work day can be difficult (and often impossible on Wall Street). Here are a few tips to help you get home by dinner time.
- Use the phone over time-consuming email conversations.
- Save your personal communications for home.
- Get your critical work done first thing.
(Source: The Daily Muse)