Speculation concerning scandal-racked investment bank JPMorgan Chase & Co. (JPM) has dominated the financial sector in September, as hundreds of millions in various fines piled up and governmental agencies looked to extract billions more. But with the market reacting indifferently to reports that the fines would eventually total nearly $12 billion, it seems that investors had braced for much worse, and in fact the bank might be poised to experience a breakthrough commensurate with their string of record profits.
Doom and gloom analysts had gone as far as to speculate JPMorgan was being targeted for a breakup for their role in fraud, improper hiring practices, and various trading infractions. Dick Bove had said the government had “a priority to break up the company,” citing the ongoing multiple governmental investigations.
However, JPMorgan has been able to settle those investigations with large cash payouts, ending speculation that the Feds can’t be appeased.
The bank first settled with regulators concerning price fixing in July for $410 million. Then they were able to make peace with US Office of the Comptroller of Currency, The Securities and Exchange Commission, the Federal Reserve, and the UK Futures Trading Commission for $920 million.
Now that they are looking to pay out $11 billion to the Department of Justice, that would bring their total fines in the last three months to approximately $12.3 billion.
The market, though, has apparently already accounted for this loss. JPMorgan rose on Wednesday two percent, even as it became clear the bank would be paying out far more than the $3 billion they had offered the DOJ.
Excepting the fines and litigation fees, JPMorgan is expected to ring in around $26 billion in net profit this year. The market has yet to reflect their rapidly rising profits, which suggests that if the government investigations are settled, the stock could experience a major upswing.
The stock was basically flat on the payout rumors, rising .25 percent to hit $51.83 a share.
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