Shareholders Press JPMorgan Over Risk-Taking
JPMorgan Chase faced more critics Tuesday, this time from some of its own shareholders at its annual meeting in Tampa, Fla. This comes after the bank disclosed it lost at least $2 billion last week in a bungled trading strategy.
The Securities and Exchange Commission is looking into the surprise loss, and the Justice Department has now reportedly opened a preliminary probe.
JPMorgan executives let shareholders do some venting at Tuesday's meeting.
Speaking before more than 500 attendees, the bank's Chairman and Chief Executive Officer Jamie Dimon opened by reading a statement that repeated his earlier mea culpas.
"There are many lessons here and many changes in policy and procedures that are already being implemented, and in addition, all corrective actions will be taken as necessary," he said.
Shareholders mostly sided with Dimon and his board of directors on various proposals. They voted down proposed corporate governance changes.
Some outspoken shareholders wanted to strip Dimon of one of his titles — chairman — giving it to a person independent of bank management. In a preliminary tally, that proposal received 40 percent of the votes — a minority, but much higher than the 15 percent vote it got four years ago.
Lisa Lindsley, a director at the American Federation of State, County and Municipal Employees union, presented that proposal at Tuesday's meeting. "The stakes are simply too high to continue business as usual, where an all-powerful CEO is his own boss," she said.
JPMorgan's board opposed the measure, saying in its proxy statement that "the proposal is unnecessary because the firm's board leadership structure already provides the independent leadership and oversight of management."
Paul Hodgson is a senior research associate with GMI Ratings, a firm that grades companies on corporate governance. He says timing played a big role; most shareholders cast their ballots before last week's disclosure of the big losses.
"I think if people had been voting after the announcement, I think it would have changed the outcome pretty significantly. And in fact, I would have predicted a pretty significant majority in support of splitting the roles," Hodgson said.
Hodgson said companies in the United Kingdom adopted this split-role structure in the 1990s. And he says the tides are shifting in the United States, too. Now, more than half of Fortune 500 companies have adopted the change — up from only a fifth of them a few years ago.
"But it's still rare for banks to split the role," he said. "I think that they're very much traditionalists."
The split structure was not the only thing on shareholder Seamus Finn's mind. Finn is a priest with the Missionary Oblates of Mary Immaculate and one of the shareholder activists who spoke at Tuesday's meeting. He told executives he wants to see the bank embrace new regulations that would limit risky trading, rather than lobby against them.
"We're wondering, Mr. Dimon, given what we've learned, do you still believe that companies can self-regulate when trading on their own accounts?" Finn asked.
Dimon somewhat testily denied that he opposes most financial regulation. He said he agrees with the intent of the Volcker Rule, if not some of its specifics. The rule, named after former Fed Chairman Paul Volcker, says banks with federally insured deposits cannot gamble on risky trading.
This didn't appease Finn. He took the microphone repeatedly, asking for a more sympathetic hearing.
"We're weary of mistakes," he said. "As shareholders, we will continue to hold you to a very high standard. But we can't help wondering if you're listening and hearing the many voices that have been speaking out on these issues."
The final vote tally will be filed with the Securities and Exchange Commission.