JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon deserves shareholders’ support even as mounting legal costs fueled the first quarterly loss of his tenure, said board member Laban P. Jackson.
“He’s the best manager I’ve ever seen, and I’m old,” Jackson, 71, said yesterday at the National Association of Corporate Directors’ annual conference in Oxon Hill, Maryland. “He has, as we all do, flaws.”
JPMorgan agreed to pay $920 million in penalties last month to settle probes of a multibillion-dollar trading loss, one of myriad woes that forced the New York-based lender to set aside $28 billion for legal costs since early 2010. The debacle was caused by a group of “renegades” inside the chief investment office who thought they had found the perfect trade, said Jackson, who heads the audit committee.
“People get to smoking their own dope,” Jackson said. “I’m sure there was some hubris involved.”
Senior executives had evidence by late April 2012 that traders in the chief investment office in London were pricing a derivatives portfolio in a way that reduced reported losses, the Securities and Exchange Commission said last month in a cease-and-desist order. Those top managers didn’t pass the information to Jackson’s audit committee, and the bank was forced to restate results once the full extent of the losses was revealed, the SEC said.
Jackson, when asked about Dimon’s openness with the board about the trade, said communication was the “least of our problems.”
JPMorgan, the biggest U.S. bank by assets, said last week that it took a $7.2 billion charge for expenses tied to regulatory matters and litigation and faces investigations into mortgage bonds, energy trading and hiring practices in Asia. Jackson said that regulators face political pressure to generate fines and penalties.
“The regulators in this country and around the world have been so politicized,” he said. “We’re just going to have to put up with this.”
Jackson was on the board of Bank One Corp. while Dimon, 57, was CEO at that firm and moved to JPMorgan after the two companies combined in 2004. Jackson is chairman of real-estate developer Clear Creek Properties Inc.