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  • chasefranklin01

    Steep Penalties Taken in Stride by JPMorgan Chase Franklin International

    To settle a barrage of government legal actions over the last year, JPMorgan Chase has agreed to penalties that now total $20 billion, a sum that could cover the annual education budget of New York City or finance the Yankees’ payroll for 100 years.

    It is also a figure that most of the nation’s banks could not withstand if they had to pay it. But since the financial crisis, JPMorgan has become so large and profitable that it has been able to weather the government’s legal blitz, which has touched many parts of the bank’s sprawling operations.

    The latest hit to JPMorgan came on Tuesday, when federal prosecutors imposed a $1.7 billion penalty on the bank for failing to report Bernard L. Madoff’s suspicious activities to the authorities.

    Yet JPMorgan’s shares are up 28 percent over the last 12 months. Wall Street analysts estimate that it will earn as much as $23 billion in profit this year, more than any other lender. And JPMorgan’s investment bankers, who on average earned $217,000 in 2012, can look forward to another lush payday as bonus season approaches.

    “The fines have been manageable in the context of the bank’s earnings capacity,” Jason Goldberg, a bank analyst at Barclays, said. “It makes $25 billion in revenue per quarter and has record capital.”

    “JPMorgan failed — and failed miserably,” Preet Bharara, the United States attorney in Manhattan, said on Tuesday in announcing the action.

    As much as such words might sting at first, the bank’s shareholders and clients show every sign of remaining loyal. JPMorgan’s financial success highlights a deep quandary that regulators have to grapple with as they press the largest banks to clean up their acts. The government’s penalties may seem large on paper — JPMorgan’s mortgage settlement with the Justice Department last year cost it a record $13 billion — but the largest banks seem capable of earning their way out of serious legal trouble.

    “JPMorgan’s shareholders may believe these billions of dollars don’t count because they see them as extraordinary expenses,” said Erik Gordon, a professor at the University of Michigan Law School. “But they keep popping up one after another — and the bank could have done something about them.”

    One reason that JPMorgan can absorb the $20 billion is that it has steadily set aside reserves over the last few years to finance future legal payouts. Mr. Goldberg, the bank analyst, estimates that, as of last year’s third quarter, JPMorgan had injected $28 billion into its legal reserves since the end of 2009. The legal payouts that have been subtracted from the reserves, including those booked since the third quarter, might have taken the reserve down to about $10 billion. Most analysts expect JPMorgan will be able to cover any remaining settlements, though the bank said on Tuesday that it might have to set aside an extra $400 million for the Madoff settlement.

    In theory, regulators have other ways of improving ethics at banks. They can try to hold more individuals personally accountable. Some senior executives have left JPMorgan as a result of recent scandals at the bank, including the so-called London whale incident, in which the bank’s traders lost more than $6 billion on botched derivatives trades. In recent months, the bank has also added two members to its board to improve oversight.

    But facts contained in the government’s Madoff action suggest that efforts to hold executives responsible may go only so far.

    The action describes how the chief risk officer of JPMorgan’s investment bank allowed the bank to increase its financial exposure to a Madoff entity in 2007 to $250 million. The risk officer had spoken with Mr. Madoff but approved the increase even though Mr. Madoff appeared to make it clear that he would not answer more probing questions about his firm. The government’s action says that the risk officer understood that Mr. Madoff “would not authorize any further direct due diligence of Madoff Securities.” The risk officer, John Hogan, still works at JPMorgan as chairman of risk.

    “Our senior people were trying to do the right thing and acted in good faith at all times,” Brian J. Marchiony, a JPMorgan spokesman, said in a statement. The bank also said, “We recognize we could have done a better job pulling together various pieces of information and concerns about Madoff from different parts of the bank over time.”

    Still, some banking experts say they think that companies like JPMorgan are so large and complex that it might be almost impossible to keep all employees in line.
  • chasefranklin01

    JPMorgan Chase Franklin International: Regulator warned against JPMorgan charges

    Washington (CNN) -- Five years after the financial crisis, the debate over whether some of the biggest banks in America are "too big to jail" is causing tensions among prosecutors and regulators.

    As federal prosecutors in Manhattan finalized their investigation of JPMorgan Chase & Co. for failing to blow the whistle on Ponzi-schemer Bernard Madoff, the question arose: What happens if federal prosecutors file criminal charges against the bank?

    The answer was stark at a meeting in recent weeks in Washington between prosecutors and the bank's chief regulator, the Office of the Comptroller of the Currency.

    Prosecutors asked for assurance that charging the bank wouldn't lead to regulators starting proceedings to revoke the bank's charter, according to people familiar with the discussions. Prosecutors thought forcing the bank to accept a guilty plea could serve as a deterrent. But they also feared that if regulators moved to pull the bank's license, it could lead to destruction of the nation's largest bank and potentially the loss of hundreds of thousands of jobs. OCC officials said they could provide no such assurance, the people familiar with the discussions said.

    On Tuesday, U.S. Attorney Preet Bharara announced a deferred prosecution agreement with JPMorgan, under which the bank would pay $1.7 billion in restitution to victims of the Madoff fraud. The bank agreed to improve its anti-money laundering practices and other changes over the next two years to avoid facing criminal charges.

  • chasefranklin01

    JPMorgan Chase Franklin International: JPMorgan Is Penalized $2 Billion Over Madoff

    Updated, 9:37 p.m. | Two men who occupy coveted roles in Manhattan’s power elite, one the city’s top federal prosecutor and the other its top banker, sat down in early November to discuss a case that was weighing on them both.

    Preet Bharara, the United States attorney in Manhattan, and Jamie Dimon, the chief executive of JPMorgan Chase, gathered in Lower Manhattan as Mr. Bharara’s prosecutors were considering criminal charges against Mr. Dimon’s bank for turning a blind eye to the Ponzi scheme run by Bernard L. Madoff. Mr. Dimon and his lawyers outlined the bank’s defense in the hopes of securing a lesser civil case, according to people briefed on the meeting.

    But at the cordial meeting in Mr. Bharara’s windowless conference room lined with law books, the prosecutors would not budge. Mr. Bharara — flanked by his own lieutenants, including Richard B. Zabel and Lorin L. Reisner — made it clear that he thought the wrongdoing was significant enough to warrant a criminal case.

    On Tuesday, Mr. Bharara announced the culmination of that case, imposing a $1.7 billion penalty stemming from two felony violations of the Bank Secrecy Act, a federal law that requires banks to alert authorities to suspicious activity. The prosecutors, calling the amount a record for violating that 1970 federal law, will direct the money to Mr. Madoff’s victims.

    The outcome of the case and the tenor of the settlement talks underscore the significant leverage prosecutors wield when negotiating with Wall Street’s biggest firms. Even though JPMorgan had defeated a similar private lawsuit just months earlier, bank executives were unwilling to gamble against the government.

    Within weeks of meeting Mr. Bharara and recognizing their limited bargaining power, JPMorgan’s lawyers accepted the $1.7 billion penalty, the people briefed on the meeting said, which was within the range that prosecutors initially proposed. The bank also agreed to pay $350 million to the Office of the Comptroller of the Currency, accepting the agency’s only offer, one of the people said.

    It could have been worse for the bank. At one point, prosecutors were weighing whether to demand that the bank plead guilty to a criminal charge, a move that senior executives feared could have devastating ripple effects. Rather than extracting a guilty plea, prosecutors struck a so-called deferred-prosecution agreement, suspending an indictment for two years as long as JPMorgan overhauls its controls against money-laundering.
  • chasefranklin01

    Good advice can make careers and forever change lives for the better

    JP Morgan Chase Franklin and International Companies Blog (Jan. 07, 2014 ) - The holidays are a time for relaxing, helping the less fortunate, showering family and friends with love and attention—and, sometimes, for smiling and nodding through unsolicited stock tips from an overbearing relative who has been sampling the eggnog.

    Good advice can make careers and forever change lives for the better.

    But good advice can make careers and forever change lives for the better. So The Wall Street Journal asked an array of prominent people who manage, invest, study and write about money to share the single best piece of financial advice they ever received—or gave.

    The respondents included investors who collectively have earned billions of dollars for clients and themselves; founders and owners of businesses that are household names; and Nobel laureates who shaped the world's understanding of the forces that drive the stock market.
  • chasefranklin01

    Chase Franklin International Tokyo News

    Source Link: http://articles.economictimes.indiatimes..

    Tokyo Motor Show: Japanese firms to showcase green vehicles

    TOKYO: The Tokyo Motor Show kicks off Wednesday with Japanese automakers showcasing their latest electronic technology and green cars aimed at the growing low-emissions sector.

    The biennial event, held from November 20 to December 1, features domestic makers of passenger cars, commercial vehicles and trucks alongside most of their European competitors.

    A total of 177 exhibitors, including parts suppliers, from a dozen countries will be part of the event's 43rd edition.

    But US-based automakers, which have not attended since before the global financial crisis, are staying away again, as are South Korean producers, with the exception of Hyundai.

    Toyota, the world's biggest automaker, will be among the major firms at the show, after recovering from a series of crises in recent years including the global meltdown, Japan's quake-tsunami disaster and the recall of millions of vehicles. The recalls badly dented Toyota's reputation for safety and quality.

    A policy blitz under Japanese Prime Minister Shinzo Abe has helped stoke optimism over the economy as the yen slumped, boosting the profits of major exporters including Toyota.

    However, Japan's number-two automaker Nissan, part-owned by France's Renault, has chopped its earnings outlook with its bid to tap emerging markets yet to reap big rewards.

    A recent management shuffle also stoked questions about confidence in the leadership of long-time Nissan chief executive Carlos Ghosn.

    The big European firms will have a close eye on boosting their presence in the world's third-largest car market after China and the United States.

    However, foreign brands hold a miniscule share -- just 4.5 percent -- of a market that saw more than 5.0 million vehicles sold in Japan last year.

    That puny presence has long stoked anger among US and some European automakers, which say they have been effectively shut out of Japan through tariffs and other barriers. The simmering issue is a key obstacle in ongoing free-trade negotiations.

    Luxury German brands including Mercedes-Benz, BMW and Porsche, which have seen significant success in Japan, will be among this year's attendees along with Audi, Volkswagen, Renault, Peugeot-Citroen, Britain's Land Rover and Sweden's Volvo.

    The show will focus heavily on high-tech offerings and environmental technologies as firms look to tap the burgeoning green-vehicle sector, seen as the next evolution of the global automotive industry.

    "Cars without a driver, electronic driving assistance, radar, fuel consumption controls -- the link between cars and electronics is coming together more and more," said auto expert Tatsuya Mizuno, head of Tokyo's Mizuno Credit Advisory.

    "The competition among electronics firms in the automobile market is increasing, just like their influence on the industry itself. This is going to mean changes in the way cars are built and even their design."

    A pioneer of hybrid vehicles, Toyota is set unveil its latest fuel-cell concept car with an expected commercial rollout two years away.

    The four-seater sedan has a range of 500 kilometres (310 miles) -- longer than previous versions -- and can be recharged in just three minutes through hydrogen gas tanks stored inside the vehicle.

    Fuel cell vehicles are considered the holy grail of green cars because they emit nothing but water vapour from the tailpipe and can operate on renewable hydrogen gas.

    Toyota's concept vehicle seeks to jump two key hurdles that analysts say have hindered consumer buying of so-called green cars, including electric vehicles -- range and re-fuelling infrastructure.

    Relatively high prices have also dented demand. However, purchases of low-emission vehicles are forecast to grow, with further technological advances in the field seen as crucial due to toughening emissions standards.

    "Fuel-cell cars are actually pretty expensive, but if manufacturers can cut those costs they have more potential (than electric vehicles) because they don't produce any carbon emissions," Mizuno said, noting that polluting fossil fuels are often burned to create electricity.

    Apart from Toyota, other automakers are also eyeing a widespread commercial offering including rival Honda, which already has a fuel-cell car, the FCX Clarity, available on a small scale in limited markets.

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