The Morning Rant: Is JP Morgan’s Wokeness a Smokescreen to Hide a Culture of Corruption?

Back when corporate America was fighting off socialism and nationalization, its politics were right-of-center. People like me had to grit our teeth to accept that the sometimes predatory behavior of Wall Street was being done by political “allies.” In my case, we were allies simply because Wall Street was also opposed to communists and socialists.

[By the way, I am completely on board with Wall Street doing traditional investment banking functions such as IPOs and underwriting bond issuances. I am not on board with their destructive derivates, market manipulation, exotic securities, etc. that intentionally bankrupt companies and destroy people’s lives. - Buck]

But the left has now captured corporate America, and the leftist elite allow Wall Street to do its rapacious thing - often unethically - so long as Wall Street also promotes cultural communism, and compels the rest of corporate America to do so too.

I am extremely proud right now not to be an ally of Wall Street.

Somehow, I missed this JP Morgan story until today. I won’t even try to paraphrase or summarize it – I’ll let the headlines and a few quotes speak for themselves.

First off, from 8 months ago:

JPMorgan to pay $60 million to settle precious metals spoofing lawsuit [Reuters – 11/19/2021]

JPMorgan Chase & Co agreed to pay $60 million to settle class-action litigation by investors who accused the largest U.S. bank of intentionally manipulating prices of precious metals futures and options.

Who would think that a big reputable money center bank like JPMorgan would engage in such unethical behavior?

Actually, it shouldn’t have been a surprise at all. Just 14 months prior, JP Morgan was slapped by the government for manipulating the Treasuries market with spoof trades.

In Sept. 2020, JPMorgan entered a deferred prosecution agreement and agreed to pay $920 million, including a $436 million criminal fine, to settle U.S. government probes into spoofing in precious metals and Treasuries.

Here’s the report from the Securities and Exchange Commission, with this damning quote from a Director at the SEC’s Division of Enforcement: "J.P. Morgan Securities undermined the integrity of our markets with this scheme…"

J.P. Morgan Securities Admits to Manipulative Trading in U.S. Treasuries [S.E.C. – 9/29/2020]

The Securities and Exchange Commission today announced charges against J.P. Morgan Securities LLC, a broker-dealer subsidiary of JPMorgan Chase & Co., for fraudulently engaging in manipulative trading of U.S. Treasury securities. J.P. Morgan Securities admitted the findings in the SEC's order, and agreed to pay disgorgement of $10 million and a civil penalty of $25 million to settle the action.

"J.P. Morgan Securities undermined the integrity of our markets with this scheme," said Stephanie Avakian, Director of the SEC's Division of Enforcement. "Their manipulative trading of Treasury cash securities created a false appearance of activity in the market and induced other market participants to trade at more favorable prices than J.P. Morgan Securities would have otherwise been able to obtain."

The trial of one of JPMorgan’s spoofers is under way right now.

JPMorgan trader spoofed so fast colleagues quipped he needed ice to cool fingers [The Business Times – 7/20/2022]

The goal of spoofing was to trick the rival computers into buying or selling to benefit JPMorgan's position, by using a large volume of bogus orders to create the false market impression, he said.

Those trades were deceptive," Trunz said of the thousands of spoof orders the desk placed over the years. "They were used to bring out a reaction from those algorithms to get what we needed done."

JP Morgan’s misbehavior hasn’t just been market manipulation. In 2015 it had to pay a $388 million settlement to the Fort Worth Employees Retirement Fund for putting them into high-risk, subprime, mortgage-backed securities before the 2008 crash, while at the same time JP Morgan was ridding itself of its own investments in those toxic securities.

What kind of organization behaves this way? What kind of organization is JP Morgan?

The answer, of course, is a very woke organization. JP Morgan’s CEO Jamie Dimon sounds like a Grievance Studies major at Oberlin.

”We are leveraging capital and expertise across our company to support a greener future for the planet and advance racial equity.”

“Because racial equity, like climate, requires a coordinated government response, we are advocating for policies that diversify.”

It seems quite likely that being woke has served as a smokescreen to keep the old-school, anti-business leftists off his back.

In addition - and no big surprise - Dimon is also trying to loot the company and its stockholders. Shockingly, shareholders are fighting back.

Jamie Dimon is set to get a $52.6 million bonus. JPMorgan Chase shareholders aren’t having it [Fortune 5/18/2022]

Shareholders voted overwhelmingly against the bank’s proposed $52.6 million all-stock retention bonus for Dimon. Just 31% voted in support of the bank’s compensation plan.

They stopped him!

Oh wait, they didn’t stop him.

The vote is not binding, however, and the bank made no commitment to reduce or eliminate Dimon's bonus based on shareholder opposition.

Those silly shareholders. How dare they try to stop Dimon from carting away $52 million of the bank’s wealth? (And please don’t tell me “it’s just stock options.” Options that are exercised are a transfer of wealth from the company’s current stockholders to the recipient.)

Dimon has been CEO of JP Morgan since 2005. The intentional, illegal manipulation of trading markets all occurred on Dimon’s watch. Did it have his blessing? Possibly. Maybe not. Was there willful blindness on his part? Only he knows.

But did it occur in a culture that Dimon oversaw? Yes. It shouldn’t have required outsiders to keep stepping in to stop the persistent illegal behavior going on under his stewardship.

The more woke a company and its executives are, the more I believe it is for the purpose of distracting from unethical conduct.

(buck.throckmorton at protonmail dot com)

posted by Buck Throckmorton at 11:00 AM

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