My Big Fat Overrated CEO: McKenna on Dimon on the Keiser Report

My Big Fat Overrated CEO: McKenna on Dimon on the Keiser Report

I taped an episode of the Keiser Report last week while in New York. The focus was Jamie Dimon with a bit of MF Global thrown in for heat. Max Keiser, the host, asked me, "Why does Jamie Dimon of JPMorgan still have a job?"

Hard to say.

When I predicted in January that Dimon would have his "comeuppance" in 2012, the prognostication was predicated on backlash from the bank's involvement, as MF Global's main banker, in the failure of that broker/dealer and FCM.

The broker-dealer's customers have accused JPMorgan of taking advantage of MF Global's weak position to hold onto hundreds of millions of their funds, but JPMorgan says it was not the culprit. The MF Global story is one-year old but so far the trustees haven't directly sued anyone. The backlash to JPMorgan and Dimon has been practically nil. Jon Corzine, CEO of MF Global, and his banker Jamie Dimon, have not suffered the consequences I thought they would.

The customers have finally sued PricewaterhouseCoopers, the MF Global auditor, for its role in the failure. The MF Global Trustee assigned its claims against several parties to the customers, partly, I believe, to avoid the conflicts the Trustee has with PricewaterhouseCoopers, the auditor, and JPMorgan. But JPMorgan was dropped from the suit and is, for now, not a defendant. I suspect the bank is negotiating a settlement so it can scratch this mess off its long list of "litigation to dispose of".

Because Jamie Dimon is facing a very long list of regulatory and legal challenges.

JPMorgan took advantage of the break from MF Global to make more trouble for itself. The toll for the "London whale" trades is a $5.8 billion loss, making Dimon's early dismissal of the issue as a "tempest in a teapot" quite embarrassing. Initial estimates of the loss hit first-quarter results but those numbers were wrong. An expedited internal investigation found that traders mismarked trades to minimize the reported loss. The quarterly securities filing had to be formally restated. The "whale" loss has also attracted shareholder suits from six public pension funds.

Dimon did face some music at the annual meeting in May. He admitted the "whale" trades were "poorly constructed, poorly reviewed, poorly executed and poorly monitored." But he doesn't seem to be losing any sleep over them and, so far, holds on to his compensation package. Investors, the board and regulators did not become aware of the trade price manipulation until August. The SEC and Department of Justice are still investigating the loss.

Read this article in its entirety at the re: The Auditors, a blog by Francine McKenna.

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