Will The Government Try to Split Up JPMorgan?

Jacob Harper  |

It’s no secret JPMorgan Chase & Co. (JPM) is under intense scrutiny right now from federal regulators. During the course of this summer alone, the bank has settled for $410 million for energy price fixing, had two former traders indicted by the Department of Justice for their part in a $6.2 billion trading loss, and been implicated in a far-reaching bribery scandal involving Chinese financial regulatory officials.  

For a financial house that did $26 billion in revenue in the second quarter of 2013 alone, the fines, settlements, and government sanctions are a cost of doing business. But the SEC seems to be moving in an especially aggressive manner against JPMorgan, leading some analysts to begin speculating that they may be targeting the bank for a potential breakup.

Popular analyst and Vice President of equity research at Rafferty Capital Markets Dick Bove suggests the “(United States government) wants the firm broken up and the management changed. Every action that it has taken in the past few years is oriented towards this goal.”

Liz Peek of the Fiscal Times suggests that the bank – lauded during the 2009 fiscal crisis for their restraint – has been specifically targeted by the Obama administration for its reckless behavior and arrogance, citing critical remarks CEO Jamie Dimon made back in 2012. Dimon specifically claimed American business was responsible for creating the 4 million new jobs in America and “government didn’t have anything to do with it.”

Regardless of motive, the government has certainly zeroed in on JPMorgan. The SEC took the unusual step of requesting that JPMorgan admit to wrongdoing in their role in hiding the $6.2 billion trading loss from investors. Usually, the bank would have been allowed to settle without admitting or denying culpability.

Such a statement from JPMorgan could open them up to fraud allegations from shareholders affected by the trading loss. The results could significantly impact JPMorgan’s chances of remaining one entity.

In January US labor unions tried to organize a shareholder vote to break up the company, which JPMorgan was able to block. With increasing governmental pressure, a breakup push could come again very soon. Except this time it will be, as Bove put it, “coordinated from above.”

JPMorgan is down 1 percent to hit $51.61 on the day. The stock is down 7.85 percent on the month.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
MYBF Muncy Bank Financial Inc. (Muncy PA) 33.05 -0.38 -1.14 508
JPM JP Morgan Chase & Co. 104.59 1.67 1.62 16,428,003 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
XOM

     

Can the Media Solve the Partisan Conflict?

Andrew McCarthy, Contributing Editor, The National Review; Michael Zeldin, CNN Legal Analyst; Celeste Katz, Senior Political Reporter, Glamour; Silvia Davi, SVP, Contributing Editor, Equities.com; and Doug Simon, CEO, D S Simon Media discuss how the media’s role has shaped the landscape for communicators and what the media is trying to do to reduce discord in society.

Emerging Growth

DirectView Holdings Inc

DirectView Holdings Inc designs and installs surveillance systems, digital video recording and services. The company through its subsidiaries operates within two divisions security and surveillance and video conferencing services.