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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

JPMorgan Chase's Rumored Settlement Is Bad for Investors

NEW YORK (TheStreet) -- I usually roll my eyes when I hear people talking about "evil" bankers and how they caused the financial crisis and how they price credit card fees too high.

In an article Tuesday, I shared my opinion that the government -- not Wall Street -- caused the housing crash.

But JPMorgan's (JPM) rumored agreement to reportedly pay at least a $750 million fine has me questioning whether bank executives are getting free passes on some bad behavior.

But to answer that, we have to ask another question, "Is JPMorgan really paying the fine?" The answer is no, the shareholders are paying for it, even though they didn't commit a crime or violate regulations. Some current investors weren't even shareholders at the time the alleged events took place.

Two of three key players were indicted.

Javier Martin-Artajo and Julien Grout have been charged with securities fraud, wire fraud, conspiracy, making false filings with the Securities and Exchange Commission and falsifying books and records. Not only is it appropriate for prosecutors to charge individuals, it's the direction prosecutors should take.

The third person is Frenchman Bruno Iksil, better known as the "London Whale" because of his portfolio size. Iksil doesn't face sanctions or punishment for any wrongdoing, although he was Martin-Artajo and Grout's boss. Iksil avoided possible prosecution by entering into an immunity agreement in exchange for assisting prosecutors.

Iksil may have had little or no involvement with any of the alleged criminal activity, but here's the problem with the SEC's shakedown (and that's what it truly is, a shakedown, of JPMorgan's shareholders).

JPMorgan is allegedly paying a fine, in part, because "JPMorgan" didn't supervise the traders adequately. Wasn't that Iksil's job? If not, wasn't it someone else's responsibility to monitor the activity if regulations called for it? Whoever that person or people are, they should open up the checking account and write a check.

In May, Goldman Sachs (GS) was fined $875,000 because a trader named Glenn Hadden violated a rule governing position size.

Hidden paid a fine of $80,000 and was suspended from trading for 10 days. We don't know whether Hidden took a vacation during the suspension, but at the time of the suspension, he was working for Morgan Stanley (MS).

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,113.54 +61.81 0.36%
S&P 500 1,983.53 +9.90 0.50%
NASDAQ 4,456.0160 +31.3120 0.71%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs