JPMorgan Investment Office Invested in Ebony, Technicolor
The JPMorgan Chase & Co. (JPM) office that lost $2 billion on flawed derivatives trades also owns stakes in the publisher of Ebony, the magazine for black Americans led by a former White House social secretary, and Technicolor SA, the money-losing French maker of film technologies.
The Special Investments Group, part of JPMorgan’s chief investment office, took the minority stake in Johnson Publishing Co., according to a July press release from the Chicago-based publisher. The size of the investment wasn’t disclosed.
Desiree Rogers, 52, was named chief executive officer of the family-controlled firm in August 2010, six months after leaving President Barack Obama’s White House. She stepped down after criticism for her handling of a state dinner that was crashed by a Virginia couple, Tareq and Michaele Salahi.
JPMorgan’s losses sparked criticism of the New York-based bank’s investment office for taking too much risk with the company’s idle cash. Chief Executive Officer Jamie Dimon on May 14 accepted the resignation of the office’s head, Ina Drew, after wrong-way bets on credit derivatives. Dimon has said the positions can’t be quickly unwound and that the losses may expand at JPMorgan, the largest U.S. lender.
The bank also invested about $150 million last year in LightSquared Inc., the failed wireless venture backed by hedge- fund manager Philip Falcone that filed for bankruptcy on May 14, a person with knowledge of the matter said. Technicolor (TCH)’s unprofitable set-top box factor in Angers, France filed for insolvency today.
Johnson Publishing is majority-owned by the family of founder John Johnson, according to a video by his daughter, company Chairman Linda Johnson Rice, which was posted on the firm’s website when JPMorgan’s investment was announced.
Ebony is the No. 1 magazine focused on black Americans, reaching almost 11 million readers, according to the monthly magazine’s website. Circulation dropped 27 percent from 2007 through 2010 before rebounding 8 percent last year to 1.13 million, according to The Association of Magazine Media. Johnson also owns Jet magazine and Fashion Fair Cosmetics.
Rogers, a longtime friend of the president and first lady Michelle Obama, was White House social secretary from January 2009 through February 2010. She had been the Illinois lottery director and later served as a natural-gas utility executive, according to data compiled by Bloomberg.
Getting the Picture
JPMorgan plans to invest as much as 158 million euros ($197 million) in Paris-based Technicolor, according to an announcement from the company on May 3 -- one week before Dimon disclosed the derivatives-trading losses. Technicolor’s shares tumbled 68 percent in the preceding year and have fallen another 19 percent since the announcement to 1.37 euros. The firm posted losses for the past five years, according to a notice on the company’s website, and its debt is rated as junk by Moody’s Investors Service and Standard & Poor’s.
JPMorgan holds a 1 percent equity stake and could wind up with as much as 30 percent, according to Technicolor. The funds came from JPMorgan and its private-investment arm, One Equity Partners, according to the Technicolor news release. The Special Investments Group is one of the shareholders in a fund that would provide the Technicolor capital injection, said Benedicte Hautefort, a spokeswoman for JPMorgan.
Norma Corio, a former JPMorgan treasurer and restructuring head who now oversees the Special Investments Group, has been nominated to become a director of the Technicolor board at a shareholder meeting scheduled for June 20, according Technicolor. Also listed among nominees is David Walsh, a partner and managing director at One Equity.
Corio, 51, Walsh, 50, and Rogers at Johnson Publishing didn’t immediately respond to requests for comment. The stakes in Ebony and Technicolor were reported yesterday on the Wall Street Journal’s website.
“These activities are done out of the holding company, not the bank,” said Kristin Lemkau, a JPMorgan spokeswoman. “They are funded with company-issued debt and equity.”
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