Home > Finance, Law > Why the JPMorgan Settlement Falls Short

Why the JPMorgan Settlement Falls Short

Thursday, September 19th, 2013 Leave a comment Go to comments

As noted in a previous FTG blog post, JPMorgan will pay an $800 million dollar fine in a settlement with the SEC and other government regulators. While JPMorgan is expected to admit wrongdoing, and the SEC likely touting the settlement as a step in the right direction for getting tough on Wall Street, some have questioned whether the deal goes far enough. One notable criticism of the settlement revolves around the fact that senior executives of the bank are expected to avoid charges in the case.

Reflecting on JPMorgan’s board’s decision to support top managers, Jeffrey W. Golan, a partner at Barrack, Rodos & Bacine, a law firm that specializes in securities class-action suits on behalf of institutional investors (but that isn’t involved in the JPMorgan lawsuit), said: “It’s like a Greek tragedy—whom do you sacrifice at the end?”

Expanding on Mr. Golan’s Greek tragedy comparison, The New Yorker made this interesting observation:

[T]he difference between Greek tragedy and the JPMorgan case is that, for the Greeks, fate determined who got sacrificed, whereas here the power is concentrated in the hands of a bunch of regulators and the eleven members of JPMorgan’s board.

Going forward, if senior executives are to be held liable, the question then becomes to what extent? This obviously is a thorny issue as holding people accountable for the actions of others is not a clear-cut task. One thing seems clear: the issue of accountability for senior executives responsible for overseeing compliance will continue to be a hot debate topic for financial executives, lawyers, regulators, and business ethicists.

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