JPMorgan Chase & Co. Chairman and Chief Executive Officer Jamie Dimon should “impose financial penalties” on the employees responsible for the bank’s trading loss of more than $2 billion, U.S. Senator Scott Brown said.
“It has been very frustrating to watch the continuing volatility in our financial markets, and this $2 billion loss, while painful, provides a good opportunity for JPMorgan to prove that compensation practices have truly changed since the 2008 financial crisis,” Brown, a Massachusetts Republican, wrote in a letter yesterday to Dimon.
Brown, one of three Senate Republicans who supported the 2010 Dodd-Frank Act, is seeking reelection in a close race with Democrat Elizabeth Warren, who advised President Barack Obama in setting up the Consumer Financial Protection Bureau. JPMorgan may reclaim incentive pay from employees responsible for the loss, Dimon said this week.
JPMorgan, the biggest and most profitable U.S. bank, is facing scrutiny from federal regulators and a Department of Justice investigation in the wake of Dimon’s disclosure of the losses, which occurred in the bank’s chief investment office. Ina Drew, who headed that unit, stepped down this week.
Stock awards for members of JPMorgan’s operating committee can be canceled or reclaimed if a member “improperly or with gross negligence” fails to identify risk, the bank said in its annual proxy statement. Drew and others who served on the panel also can have 2012 stock awards canceled if Dimon deems their performance was “unsatisfactory for a sustained period of time,” according to the proxy.
“It is my hope that you will use this provision to its full potential to address this situation,” Brown said in his letter, referring to the language in the proxy statement.