It seems that JP Morgan Chase has gone from government darling to heavy regulatory scrutiny since the London Whale incident, as this article from the Wall Street Journal shows (J.P Morgan Under Regulatory Fire, WSJ 5/3/13).
Burned customers have known for years that Chase isn’t the prim and proper corporate citizen it claims to be (just read this blog for many many infractions against customers). Among the concerns:
Regulators also presented Mr. Dimon and the board with an annual report card that was critical of compliance, audit and risk …
That covers pretty much everything an investment bank does. Some of the specifics they are accused of are:
The Federal Energy Regulatory Commission has served J.P. Morgan with a Wells notice accusing the bank of misrepresenting prices of electricity contracts with California and Michigan that resulted in over payments. It also alleges commodities chief Blythe Masters and three other traders had false representations under oath about trading schemes and the strategies behind the schemes.
Regulators are also examining whether customers were charged for services but didn’t receive the actual benefit and whether the bank provided adequate warnings about the fraud of Bernard Madoff, said people familiar with the bank’s discussions with regulators. J.P. Morgan and the OCC declined to comment.
Some good news for Chase customers as regulators appear poised to increase scrutiny of Chase’s consumer banking:
Regulators are making it harder for J.P. Morgan to enter new markets or introduce new products, and they are preparing to hit the bank with more enforcement actions highlighting past missteps in the bank’s consumer operations.
It seems that Chase has irked regulators by blowing them off in the past.
Regulators emphasized their lack of trust in management and their view that past guidance had not been heeded.