NEW YORK, Sept 12 (Reuters) – JPMorgan Chase Co plans to spend an additional $4 billion and commit 5,000 extra employees to fix risk and compliance issues after a slew of investigations by regulatory authorities, the Wall Street Journal reported on Thursday.
JPMorgan will spend $1.5 billion on managing risk and complying with regulations and plans to add $2.5 billion to its litigation reserves in the second half of the year, the Journal reported.
The bank will also increase its risk-control staff by 30 percent, the WSJ said, citing people familiar with the matter.
JPMorgan said on Monday that it would add more than $1.5 billion to its legal reserves in the third quarter and 3,000 people had been added to control functions.
Another 2,000 assigned to the bank’s various business lines are also working on compliance issues, a person familiar with the matter who would not provide the total cost told Reuters.
Chief Executive Jamie Dimon said in April in his annual letter to shareholders that the bank’s first priority had become fixing its control and compliance issues. He warned then that the company was forgoing some business investment projects to do the work.
On Monday, the company called the effort “unprecedented” and said it now involves 23 different work streams, including remedial work on the capital plan it had submitted to the Federal Reserve earlier this year and actions the government ordered in January to fix its controls, abide the Bank Secrecy Act and fight money laundering.
The Journal quoted Dimon as saying in an interview that the work “will make us stronger in the long run.”
JPMorgan has been under intense scrutiny from regulators since May 2012 when Dimon announced that the company was losing billions of dollars in a corporate office in London on derivatives trades that were far worse than he knew.
Dimon initially called news reports of possible losses by a trader known as the “London Whale” a “tempest in a teapot”. The positions ultimately cost more than $6.2 billion.
Since the derivatives debacle, the U.S. Department of Justice, the Securities and Exchange Commission and other government agencies have developed investigations into subjects including energy trading, possibly bribery in hiring practices in China, possibly fraudulent sales of mortgage securities.
The multiple probes are driving the higher costs for litigation, the company said on Monday. Chief Financial Officer Marianne Lake said then that the legal tab was still being calculated and promised to provide more details when the company next reports quarterly results on Oct. 11.
The company spent about $5 billion, pre-tax, on litigation in each of the past two years.
This year JPMorgan’s legal costs are likely to reach similar levels, analyst Charles Peabody of Portales Partners has said.
JPMorgan reported $21.3 billion in net income for 2012.
Also on HuffPost:
Loading Slideshow
London Whale
The bank’s chief investment office gambled on credit derivatives, a href=”http://www.huffingtonpost.com/2012/07/13/jpmorgan-chase-q02-earnings-2012_n_1670629.html” target=”_hplink”losing $5.8 billion/a (so far), and its trading desk may have tried to hide the losses from the home office. The bank says it is being sued by shareholders over the losses and has gotten subpoenas and requests for information from “Congress, the OCC, Federal Reserve, DOJ, SEC, CFTC, UK Financial Services Authority, the State of Massachusetts and other government agencies, including in Japan, Singapore and Germany.”
Milan Swap Deal
The bank has faced a href=”http://www.bloomberg.com/news/2012-07-18/milan-swaps-prosecutor-seeks-ban-on-4-banks-from-government-work.html” target=”_hplink”lawsuits and criminal investigations/a over an interest-rate swap deal it made with the city of Milan, Italy, back in 2005. The bank settled a civil suit, but criminal charges are still pending against the bank and several employees, with hearings in the trial “occurring on a weekly basis since May 2010.”
Enron
The bank and some of its executives are still being sued over the bank’s relationship with the failed, fraud-ridden energy giant, more than a decade after its failure.
Energy Manipulation
Speaking of Enron, the a href=”http://www.huffingtonpost.com/mark-gongloff/jpmorgan-chase-power-market_b_1647131.html” target=”_hplink”Federal Energy Regulatory Commission is investigating/a charges that JPMorgan manipulated power markets in California and the Midwest.
Credit Card Swipe Fees
The bank said in the filing that a href=”http://www.bloomberg.com/news/2012-08-09/jpmorgan-says-credit-card-swipe-case-cost-1-2-billion.html” target=”_hplink”it will pay about $1.2 billion/a to settle charges that it conspired with MasterCard and Visa to rig credit-card swipe fees.
Libor
The bank is being investigated by regulators all over the world for its a href=”http://www.huffingtonpost.com/2012/08/09/jpmorgan-chase-libor-subpoenas_n_1760015.html” target=”_hplink”alleged involvement in manipulating Libor/a, a short-term interest rate that affects borrowing costs for people, businesses and governments all over the world.
Madoff Ponzi Scheme
Several lawsuits have accused the bank of aiding and abetting Bernie Madoff’s Ponzi scheme, the biggest in history. The Madoff bankruptcy trustee and others have also sued the bank to get back some Madoff clients’ money.
MF Global
The bank is under investigation by regulators for its a href=”http://www.google.com/url?sa=trct=jq=esrc=ssource=webcd=1ved=0CFEQFjAAurl=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fhalahtouryalai%2F2012%2F06%2F04%2Fjpmorgans-other-messy-problem-mf-globals-missing-money%2Fei=Ui0lUNP7Eqe96QHP94CABAusg=AFQjCNEJVDksnFTh3KP1uS3u73bLgoSfZQ” target=”_hplink”relationship with the failed brokerage firm MF Global/a. It is also being sued for allegedly aiding and abetting MF Global misuse of customer money.
Mortgage Backed Securities
The bank is being sued by hordes of investors for its bundling and selling of mortgage-backed securities packed with bad mortgage debt before the financial crisis. “There are currently pending and tolled investor claims involving approximately $130 billion of such securities,” the bank says.
Mortgage Foreclosures
The bank was part of the big a href=”http://nationalmortgagesettlement.com/” target=”_hplink”$25 billion settlement/a with the government over mortgage-foreclosure abuses. But there are still several lawsuits and regulatory actions pending against the bank over its foreclosure practices.
Peregrine Financial
The bank didn’t mention this in its regulatory filing, but it is also involved in the failure of the Iowa brokerage firm Peregrine Financial. JPMorgan a href=”http://www.huffingtonpost.com/2012/07/12/pfg-customer-account-jpmorgan-chase_n_1668386.html” target=”_hplink”holds some customer money for the firm/a, and recently a href=”http://www.foxbusiness.com/news/2012/08/06/jp-morgan-objects-to-terms-proposed-by-peregrine-trustee/” target=”_hplink”tussled in court/a with the PFG bankruptcy trustee.
JPMorgan Chase To Spend Another $4 Billion To Fix Risk And Compliance ...
Không có nhận xét nào:
Đăng nhận xét