NICE SUIT

05.08.13

JPMorgan Chase’s Crazy Fine Tally

JPMorgan Chase is one of America’s largest and most highly regarded banks. But in the past few years, it has paid out several billion dollars to settle lawsuits from consumers and regulators.

The nice thing about being in the financial services world is that you never really have to say you’re sorry. Screw over customers, botch foreclosures, run afoul of important regulations, and violate some important rules—and the worst you’ll have to do is pay some fines or settlements. It’s a cost of doing business, even for America’s most highly regarded banks.

Take JPMorgan Chase. The New York–based firm, under the leadership of hard-charging CEO Jamie Dimon, emerged from the financial crisis in much better shape than many of its rivals. But that doesn’t mean the bank wasn’t involved in many of the shenanigans that helped cause the financial crisis and have contributed to a slow recovery. In fact, in the past few years, JPMorgan Chase has been party to a series of very expensive legal settlements. In many recent quarters, as it rang up big profits, the bank was forced to set aside hundreds of millions of dollars to deal with litigation. Joshua Rosner, a financial analyst and co-author of Reckless Endangerment, in March estimated that the company’s litigation expenses since 2009 have totaled $16 billion.

And it’s not over yet. Along with a current investigation as to whether it failed to alert authorities to suspicions about Ponzi schemer Bernie Madoff, The New York Times reported that at least eight federal agencies are currently investigating the bank.

Here are some of the highlights—or lowlights—of the bank’s settlements over the past couple of years.

Date: April 2011

Amount: $56 million

Behavior: JPMorgan was one of several banks called out in a class-action lawsuit for overcharging or wrongfully foreclosing on active-duty military personnel. The company apologized, paid out $27 million in cash, cut interest rates on home loans and returned houses that were wrongfully foreclosed upon.

In many recent quarters, as it rang up big profits, the bank was forced to set aside hundreds of millions of dollars to deal with litigation.

Date: June 2011

Amount: $153.6 million

Behavior: The Securities and Exchange Commission sued JPMorgan for misleading buyers by allegedly failing to inform investors that a hedge fund assisted in picking and betting against securities in a collateralized debt obligation JPMorgan had sold in 2007. JPMorgan paid $153.6 million to settle the charges without admitting or denying the allegations.

Date: July 2011

Amount: $229 Million

Behavior: In response to a suit by federal and state authorities, JPMorgan settled allegations that it rigged the bidding process for reinvesting bond transactions that affected 31 state governments. The bank paid $229 million to settle the charges without admitting or denying the allegations.

Date: August 2011

Amount: $88.3 Million

Behavior: Talk about shady dealings. The Treasury Department alleged the banking giant violated sanction orders by conducting transactions with people or entities tied to Iran, Sudan, Cuba, and Liberia. JPMorgan Chase settled the charges and violations by paying $88.3 million civil penalty.

JP Morgan Chase / OWS
JP Morgan Chase employees watch Occupy Wall Street protesters from their headquarters in Lower Manhattan, October 28, 2011. (Mario Tama/Getty)

Date: February 2012

Amount: $5.29 Billion

Behavior: JPMorgan and four other major mortgage servicers agreed to pay a combined $25 billion to settle charges with state attorneys general, the Justice Department, and the Department of Housing and Urban Development relating to what Washington Attorney General Rob McKenna called years of “shoddy loan servicing, illegal robo-signing, and faulty foreclosure processing.” JPMorgan Chase’s share of the settlement came to $5.29 billion.

Date: February 2012

Amount: $110 million

Behavior: Along with Bank of America and a few smaller lenders, JPMorgan settled consumer litigation that claimed the banks processed checks by size—rather than by chronological order—so they could charge unwarranted overdraft fees.

Date: March 2012

Amount: $150 million

Behavior: After being sued by pension funds and investors for investing their funds in a risky structured investment vehicle that failed at the height of the global financial crisis in 2008, JPMorgan settled the suit without admitting wrongdoing.

Date: November 2012

Amount: $296.9 million

Behavior: The Securities and Exchange Commission charged JPMorgan with misleading investors about the quality of mortgages that underlay mortgage-backed securities it sold. The bank settled the charges without admitting or denying guilt.

JPMorgan Chase Chairman and CEO Jamie Dimon
JPMorgan Chase Chairman and CEO Jamie Dimon testifies during a U.S. House Financial Services Committee hearing on Capitol Hill in Washington, D.C., June 19, 2012. (Saul Loeb/AFP/Getty)

Date: January 2013

Amount: Unclear

Behavior: Ten banks, including JPMorgan Chase, agreed to an $8.5 billion settlement with the Office of the Comptroller of the Currency and the Federal Reserve over “robo-signing” and other alleged abuses of the foreclosure process. The banks were to pay $3.3 billion to harmed borrowers and provide a combined of $5.2 billion in assistance in the form of principal reductions or mortgage modifications. JPMorgan Chase didn’t disclose its share of the settlement.

Date: March 2013

Amount: $100 million

Behavior: JPMorgan Chase agreed to return $546 million to former customers of MF Global Holdings, the investment firm run by former New Jersey governor Jon Corzine that collapsed in 2011. While it did not admit wrongdoing, JPMorgan had been threatened with a lawsuit if it didn’t return the cash that had been transferred from MF Global during the firm’s chaotic final days.