Discussion Veers Very Quickly to the JPMorgan Proxy Vote on Jamie Dimon.

[ by Howard Haykin ]

Just for the record, and in case anyone cares, the Hess Corporation announced Friday that it would separate its chairman and chief executive roles, hoping to blunt a campaign by an activist investor and assuage restive shareholders.

While the decision clearly has little it any direct bearing on the proxy fight at JPMorgan Chase in midtown Manhattan - it's relevant to note that this issue continues to be one of the most popular topic on the news charts.  And the voice of public opinion appears to be headed toward favoring a similar split at JPMorgan.

Latest Regulatory Issues.   How can't investors question the logic of having one person wear two hats  - given the series of regulatory blow-ups that have surfaced at once 'pristine' JPMorgan Chase.  All the good vibes and "walk on water" connotations associated with the bank under Jamie Dimon's leadership no longer are in evidence.  Instead, we see mounting questions about the culture of the bank under Mr. Dimon - where a pursuit of increasing revenues and profits blunts concerns for adhering to regulatory and ethical standards. 

Sadly, it appears that the impetus for such change originated in the corner office.  Even if the corner office was not the origination point, that sort of corporate culture was apparently embraced by senior management.  At that point, the culture seemed to spread - in both intensity and scope.  The climax, in our opinion, was in evidence in 2012 when Jamie Dimon repeatedly played down the Whale Trading losses, and held back from providing information to Congressional panels.  This sort of behavior was nothing short of a "COVER-UP." 

Take Away.   While our deep-seated respect and admiration for Jamie Dimon for all he's accomplished, particularly when confronted by significant obstacles triggered by high-level corporate politics, we have turned against Mr. Dimon for being uncharactistically standoffish and obtuse with the facts. Clearly, there were facts and factors that he chose hot to share with the public.

For this reason, Compliance Insights has all along supported  a split of the Chairman and CEO responsibilities at JPMorgan Chase.  This conviction has strengthened as the number of regulatory questions have grown - involving commodities, Madoff, MF Global, credit cards, and more.  What's worse is that these are all separate and apart from the horrific $6.2 billion London Whale trading loss.  And they involve different business lines, meaning that the potential for widespread compliance malaise is very real.

For these reasons, we have taken a new position, one that cares little if Mr. Dimon stays or goes - as he's threatened to do if he does not receive a full mandate from the board. 

Perhaps it is time for a change, and the introduction of a change in culture.  That might be fine, but be forewarned.  When Sandy Weill left Citigroup, amid a cloud of regulatory investigations, the board sought to improve the bank's compliance and ethical image by elevating Chuck  Prince as CEO.  He had served as Sandy Weill's chief legal counsel, but none of that prepared Mr. Prince to run the myriad of businesses in countries tall over the world.  He eventually left, with a tarnished legacy.

We hope JPMorgan, if it takes this road, avoids such a mistake. 

And thanks go to the Hess Corporation, for introducing the topic to us.

For further details, go to:   [ Dealbook, 5/10/13 ].