FBI opens inquiry into JPMorgan's $2B loss
(MoneyWatch) The FBI has opened a preliminary inquiry into the $2 billion trading loss at JPMorgan Chase (JPM), CBS News has confirmed.
A federal law enforcement source told CBS News investigative producer Pat Milton Tuesday that the inquiry is in its initial stages.
According to CBS News Justice and Homeland Security correspondent Bob Orr, the FBI and Justice Department are checking if any federal laws may have been broken. Separately, Securities and Exchange Commission Chairman Mary Schapiro said last week that the agency's "regulators are focused" on the trading losses at JPMorgan.
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Investors have pummeled JPMorgan's stock price since the trading loss was revealed last Thursday. The stock lost 12 percent in two trading days, which amounts to nearly $20 billion in market value. It bounced back on Tuesday, rising 3 percent.
When JPMorgan Chase CEO Jamie Dimon announced the loss, he called it a "flawed, complex, poorly reviewed, poorly executed, and poorly monitored" derivatives trading strategy. The trades were made in the bank's Chief Investment Office, a London-based unit of the bank that manages risk for the firm. JPMorgan announced this week that the head of that unit, JPMorgan veteran Ina Drew, would retire after more than 30 years with the company.
Also Tuesday, Dimon survived a shareholder push to strip him of the title of chairman of the board. Most of the shareholder ballots were cast in the weeks before JPMorgan revealed the trading loss, suggesting that shareholder pressure on Dimon could escalate.
At the annual shareholder meeting in Tampa, Dimon also won an endorsement of his 2011 pay package, which totaled $23 million, according to an Associated Press analysis of regulatory filings.
Dimon, unusually subdued, told shareholders at the meeting that the company's mistakes were "self-inflicted." Speaking with reporters later, he added: "The buck always stops with me."
His pay package passed with 91 percent of the vote. The vote to strip him of the chairman's title won only 40 percent support. The bank did not announce separate results from before and after the loss was revealed.
Dimon was confronted at the meeting by shareholders upset about the trading loss, which has rattled investor confidence in the bank and complicated JPMorgan's efforts to fight tougher regulation of Wall Street.
Rev. Seamus Finn, representing shareholders from the Catholic organization Missionary Oblates of Mary Immaculate, said that investors had heard Dimon apologize before for the foreclosure crisis and other problems.