We had an interesting conversation yesterday about the timing of JPMorgan’s disclosure of $2.3 billion trading losses, after the tallies were counted in a shareholder proposal to replace Mr. Dimon as chairman of the bank’s board of directors. Mr. Dimon is currently chairman and chief executive officer, and while the attempt to strip him of the board role failed, the proposal received 41 percent of the vote, an improved result for investors like AFSCME’s Lisa Lindsley*, who see a conflict of interest when the two roles are shared.
“That was a strong vote,” said our friend, who thinks about these things. “What would have happened if Dimon had disclosed the losses two days earlier? Would there have been more time to build support for the proposal?”
Timing indeed: If you read our tale of the ongoing Dimonfreude in this week’s paper, you know we’re intrigued by the question of when Dimon knew the extent of the London Whale losses, and why he chose May 10 for his bombshell disclosure.
The effect on shareholder proposals is surely incidental, a mere appetizer to the more important meal: How the timing of the disclosures factored into the performance of the stock, which has plummeted more than 9 percent since New York markets closed on Thursday, wiping out more than $15 billion in value?
Still, we’re not the only ones interested. The FBI has joined the ranks of federal agencies sniffing around the firm’s public disclosures, dating back to Dimon’s April 13 dismissal of the London Whale story as “a complete tempest in a teapot.” The Securities and Exchange Commission, Office of the Currency of the Comptroller and both houses of Congress are also said to be investigating, while two shareholder lawsuits may stir the pot further still.
To which we can only say, stay tuned. Perhaps one of these parties or another will enter the fray with a bombshell disclosure of their own.
*Lindsley told the Times: “There is an essential and potentially disastrous conflict of interest when the same person shares both jobs.”
(Eric Piermont/AFP/Getty Images)
