JPMorgan Chase, the country's largest bank, continues to reel from its $2 billion trading loss last week, which critics are touting as evidence that Wall Street is still making the types of dangerous bets that caused the financial crisis in 2008. JPMorgan Chase's stock plunged by nearly 10 percent the day after CEO Jamie Dimon disclosed the loss, erasing $13 billion from the company's value. Dimon, one of the loudest voices against government regulation of Wall Street, has been pilloried in the press for what he has described as a "terrible, egregious mistake." And now the Justice Department is investigating whether the controversy involved more than mere blunders, raising the prospect that the bank or its executives could be charged with violating securities laws. Did Dimon do anything illegal?
Dimon might have misled shareholders: When news reports shed light on the bad bet a month ago, Dimon dismissed them, saying they were nothing more than a "tempest in a teapot," says Peter J. Henning at The New York Times. It's illegal for executives to make false or misleading statements about "material information" to shareholders, and Dimon's "reassuring statements may have given an increasingly false sense of security to investors about JPMorgan's risk management." Federal investigators will have to figure out what Dimon knew about the trade, and when he found out it had gone sour.
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