Wednesday, September 25, 2013

JP Morgan New Narrative: Shareholders Are Victims!

We are a nation of self-anointed victims. Victimhood extends both across our population demographic and up and down our economic demographic to include institutional shareholders of JP Morgan Chase, according to the New York Times and to Professor John Coffee of the Columbia Law School.  He should know better, but here's a quote:
“It is perversely inappropriate. You are adding injury to injury. All we’re doing is punishing the shareholders more,” said John C. Coffee Jr., a professor of securities law at Columbia Law School. “This is a case where the victims are the shareholders.”
These remarks were made as JPM paid $920 million to "settle" civil cases related to the London Whale fiasco.  This is just the beginning, as politically ambitious politicians, Federal prosecutors, and corporate governance activists jump on the bandwagon to feed at the trough filled with the shareholders' assets.

It's the fault of the shareholders, and they deserve nothing but what they get, which may not be too much of a penalty on the stock prices, since QE infinitum continues to expand forward multiples.  These same shareholders bought into the findings of the London Whale report without demanding any changes in the way this sprawling financial supermarket is managed.  They also chose not to split the Chairman and CEO roles, in a referendum on Jamie Dimon's popularity.  They also backed not penalizing or changing the structure of management compensation.  These folks are not victims but lazy and uninvolved in delving into their own investments beyond the newspaper and analyst reports, which might as well be newspaper reports.

Shareholders should not be rescued from their own lassitude.  They always had the opportunity to sell, and they must be copacetic with the management of their company.    Shareholders, in turn, don't refund any of their investment management fees for separate accounts or overpriced mutual funds due to their lack of diligence, so let's leave this narrative where it belongs, in the circular file.

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