Seeks SEC Permission to Skip Shareholder-Introduced Proposal.

[ by Melanie Gretchen ]

JPMorgan Chase is doing everything in its power to prevent a shareholder proposal from being voted on at the bank's upcoming annual shareholders meeting.  A group of U.S. labor unions is looking to force JPMorgan's Board to consider breaking up the bank, following the $6.2 billion in trading losses that the bank incurred from the "London Whale" affair.  

JPMorgan Chase has gone so far as to write to the SEC on 1/14, asking permission to omit the proposal from the ballot of measures that shareholders will vote on this spring.  [C-I Note: Does such a request risk violating the hard-fought shareholder rights that the SEC recently enacted?]

The Shareholders' Proposal. The AFL-CIO's Reserve Fund, a union fund that owns JPMorgan shares, contends that the London Whale trade revealed the firm to be too big to manage. 

"In our view, the evidence is mounting that JPMorgan has reached the point where stockholders would benefit from restructuring."

The Union fund, therefore, proposes to have bank directors form a committee to explore "extraordinary transactions that could enhance stockholder value," including breaking off one or more of the company's businesses.  It's further recommended that such a committee hire 3rd-party advisers and produce a report to shareholders 120 days after this spring's annual shareholder meeting.

JPMorgan Responds - Letter to the SEC.   JPMorgan challenges the shareholders' proposal because it concerns the firm's ordinary business, which is an exclusion allowed under SEC rules.   The bank's lawyers further note that the proposal contains "false and misleading" statements, and is "vague and indefinite."  CEO Jamie Dimon told a Fox Business reporter that there's no reason for the bank to break up or spin-off businesses:  "We are in four businesses. They are all doing very well.  There is a lot of cross-sell. We have good returns on capital, third year of record profits. There is no reason for us to contemplate something like that."

Similar Proposals Face JPM Rivals.   Bank of America, Citigroup, and Morgan Stanley face similar proposals by another union - the American Federation of State, County & Municipal Employees, according to Lisa Lindsley, AFSCME's director of capital strategies.  Like JPMorgan, those banks are trying to omit AFSCME's proposal from their proxies.

For further details, go to [Reuters, 1/24/13].