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Dimon takes heat from JPMorgan investors
FBI opens probe of $2B trading loss
TAMPA, Fla. — The embattled head of JPMorgan Chase offered a quick but blunt apology to shareholders Tuesday for a $2 billion trading loss that “should never have happened” and survived a push to strip him of the title of chairman of the board.
He spent four minutes talking about the trading loss and steps the company has taken to address it, and just two more talking about accomplishments of the company over the past year.
The loss, disclosed Thursday, rattled investor confidence in the largest bank in the United States and in the ability of Wall Street to fight regulatory changes more than three years after the financial crisis.
Even as Tuesday’s shareholder meeting was convening, a law enforcement official said that the FBI’s New York office is heading an inquiry by the Justice Department into the JPMorgan loss. The official, who was not authorized to speak about the decision, spoke on the condition of anonymity and characterized the inquiry as preliminary.
Treasury Secretary Timothy F. Geithner, in his first public comments, said the JPMorgan trading loss only reinforced the Obama administration’s argument that financial regulations needed to be strengthened.
Mr. Dimon told shareholders that the trade in question, an ill-timed bet on so-called credit derivatives, “should never have happened. I can’t justify it. Unfortunately, these mistakes are self-inflicted.”
But Mr. Dimon did win a nonbinding shareholder endorsement of his pay package from last year, which totaled $23 million, according to an Associated Press analysis of regulatory filings.
Most of the shareholder ballots were cast in the weeks before Mr. Dimon revealed the trading loss. The pay package passed with 91 percent of the vote. The vote to strip him of the chairman’s title won only 40 percent support.
Mr. Dimon was confronted at the meeting by shareholders upset about the trading loss. To some questions, he offered a simple, “OK, thank you.”
The Rev. Seamus Finn, representing shareholders from the Catholic organization Missionary Oblates of Mary Immaculate, said that investors had heard the chairman apologize before for the foreclosure crisis and other problems.
“We heard the same refrain: We have learned from our mistakes. This will never be allowed to happen again,” Father Finn said. “I can’t help wondering if you are listening.”
Lisa Lindsley, director of capital strategies for an influential union of public employees that is also a major JPMorgan shareholder, said independent board leadership was in shareholders’ best interest.
“An all-powerful CEO is his own boss,” she said. “Looking for an infallible CEO is a fool’s errand.”
While the meeting took place, JPMorgan stock climbed for the first time since the trading loss was revealed. It had fallen from $40.74 on Thursday to $35.79 after Monday’s trading, but bounced back to close at $36.24, up 45 cents, on Tuesday.
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