Dimon faces no pay revolt despite FBI probing loss
JP MORGAN’S Jamie Dimon won the support of 91 per cent of shareholders for his pay package yesterday despite having presided over a $2bn (£1.25bn) trading loss from a botched hedging strategy.
US regulators widened their investigation into the losses, with the FBI and Department of Justice now “looking into it”, according to the FBI, although the probe is believed to be highly preliminary at the moment.
But even as criticism of the bank ramps up among regulators, shareholders appeared surprisingly placid.
The bank had proposed creating the role of an independent chairman to preside over Dimon, which, while the norm in the UK, is rare among US investment banks.
But only 40 per cent of shareholders voted in favour at the bank’s annual general meeting yesterday, meaning he will continue to reign solo.
Dimon told shareholders that he is looking at “appropriate action” on clawing back pay from executives who were involved in losing the money, which would mark the first time an American bank has sought to take pay back from former management over such a scandal.
Most of the $15.5m awarded last year to Ina Drew, the chief investment officer who resigned on Monday, could be liable to be taken back, since most of her pay is deferred over several years and has not yet been paid out.
Dimon told shareholders that the loss, which is $800m post-tax, is a “self-inflicted” wound, but that he is “not against regulation”, provided it is aimed at stopping bailouts for failing banks.
But there are growing fears that the loss could increase significantly as hedge funds that are building positions on the other side of the trade know that the bank needs to get out of it. Dimon has faced calls to simply cut the losses and close out the trade immediately, but has so far resisted them, believing that the bank can lose less by taking its time.
It is understood that the US regulator is leading the investigation into the loss, but one former FSA source said that the bank could face questions over its competence, which is a renewed focus of the UK watchdog’s enforcement division.