On Sept. 19 JPMorgan Chase & Co. (JPM) settled out a large chunk of their myriad ongoing legal troubles by paying out $920 million to various government agencies. The settlement was massive indeed, but in the long run a win for a bank. But JPMorgan stills faces another major legal hurdle, and it’s one that could make their $920 million settlement look like peanuts.
Despite the round of settlements, JPMorgan has failed to shake the most persistent government investigator, the United States Department of Justice. The DOJ is investigating the bank for several major infractions, ranging from energy price fixing to nepotistic hiring practices in China. JPMorgan has offered the DOJ $3 billion to settle all claims against them, and reports that surfaced on Sept 23 suggest the governmental agency is reportedly balking at the offer as “billions” too low.
Getting the DOJ off their backs would be a major win for the investment bank, whose legal troubles hold the company back form capitalizing on their string of record profitable quarters. However, that win might be harder to achieve than previously thought, as the DOJ is adamant the bank is guilty of not just the crimes mentioned above, but also fraud involving mortgage-backed securities on a massive scale.
JPMorgan reaps over $6 billion a quarter in net income, and thus can afford the settlements without facing insolvency, but the fact that the Department of Justice is remaining steadfast is troubling.
The zeal with which the DOJ has pursued JPMorgan has led some analysts like Dick Bove to even speculate that the bank is being targeted for breakup. The bank was able to quash an internal shareholder putsch to do just this in January.
JPMorgan is also currently being investigated by the Commodity Futures Trading Commission for impropriety involving the London Whale trading debacle and subsequent attempted cover-up. Despite the ongoing legal investigations, JPMorgan remains chipper, saying talks with the DOJ are “fluid.”
JPMorgan gained 2 percent on the day to hit $51.35 a share.
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