In his surprisingly frank annual letter to investors, J.P. Morgan Chief Executive Jamie Dimon issued a stark warning: the regulatory fallout from the $6.2 billion London Whale trading fiasco is far from over. We now know a bit more about what he meant. Regulators are all over J.P. Morgan.
Last month, officials blasted the bank’s compliance, audit and risk procedures in an annual report card, demanding a series of unidentified changes be implemented in a miniscule window – 30 days, according to The Wall Street Journal. Regulators also told Dimon that they don’t trust the bank’s management.
The Office of the Comptroller of the Currency (OCC) appears to have set up shop at J.P. Morgan, a bank once hailed for its risk control. The OCC is reportedly planning to force changes in the bank’s consumer collections department, which it found to have certain weaknesses, and has voiced concerns over the firm’s clearing operations, according to the Journal. Regulators also told J.P. Morgan that new products and entries into new markets will be closely scrutinized. The OCC already rejected one idea.
The end result is a stagnant organization. J.P. Morgan has put 60 new initiatives on hold as it adjusts to its regulatory chains. On the plus side, J.P. Morgan is hiring risk, credit, finance, legal, compliance, audit, technology and operations staff to meet impending mandates.
Banks, hedge funds and asset managers are looking to hire compliance officers in droves. The problem is there are few people who fit the bill. Here are the skills you need to be considered.
Vinik Asset Management, the Tampa-based hedge fund that has been hemorrhaging customer funds in recent months, will close its doors. The fund is down 5% since last year’s restructuring effort that included a new investment team.
The economy added 165,000 jobs in April, dragging the unemployment rate down to 7.5%, the lowest level since December 2008. Pacific Investment Management Co. founder Bill Gross isn’t impressed, though.
Warren Buffett’s Berkshire Hathaway, which recently poached four insurance executives from AIG, has “big time” interest in building out a commercial-insurance business.
Royal Bank of Scotland reported its first quarterly profit since 2011, putting the firm one step closer toward privatization. The bank helped itself by slashing compensation in its investment banking division.
Ashley Jarvis, the global co-head of consulting for prime brokerage at Morgan Stanley, is leaving the firm. He’s reportedly looking at roles with other banks or hedge funds.
Famed investor Charlie Munger has an interesting theory on why regulators don’t trust bankers: “They're like heroin addicts.”
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