This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Analysts Give JPMorgan a Pass on Unknown Legal Expenses

RBC Capital analyst Gerard Cassidy increased his estimate of legal expenses to $1.6 billion from $500 million but made no changes to his earnings estimate.

That's because the analyst does not consider legal expenses to be a core earnings item. Analysts tend to exclude items that tend to be non-recurring or unsustainable from their earnings estimates but they do not always agree on what is core and what is non-core.

Charles Peabody of Portales Partners in contrast seems a lot more concerned about the litigation risk at JPMorgan.

The bank since 2007 has likely accumulated $22 billion in legal expenses, almost the equivalent of a full year of profits, according to Peabody.

This year litigation costs could be as high as $5 billion for JPMorgan, according to Peabody, if the company settles the mortgage-backed securities lawsuit from the Federal Housing Finance Agency and enters into multiple settlements over the "London Whale" hedge trading debacle with the Securities and Exchange Commission, the Department of Justice and UK authorities.

Peabody is also concerned the SEC might try to extract an "admission of guilt" from JPMorgan over the London derivative trades.

"Regulators and administration want to remove the benefits of being big," he said in an interview with Bloomberg News. "Now if you are too big to manage they are going to raise the cost of litigation for being too big to manage."

-- Written by Shanthi Bharatwaj in New York.

>Contact by Email.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JPM $61.24 0.00%
AAPL $93.24 0.00%
FB $117.81 0.00%
GOOG $701.43 0.00%
TSLA $211.53 0.00%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs