Will top JPMorgan execs face perjury charges?


In a rather ominous development for JPMorgan Chase (NYSE:JPM), the Financial Times reports that Senate aides "are looking for inconsistencies in statements made by Jamie Dimon, chief executive of JPMorgan Chase, and Doug Braunstein, former chief financial officer, as they consider whether to make referrals to securities regulators and the justice department."

The SEC is also taking a look at related issues.

In the wake of the blockbuster, damning report about JPMorgan executives and their conduct as the London Whale "hedging" fiasco unfolded, this move is anything but surprising. The goal of prosecutors is to determine if any of the statements by executives were at odds with the conclusions of the report. More to the point, they are looking for perjury, for examples of executives claiming ignorance or even lying when they well knew what was going.

For example, "In a letter to the Senate banking committee following his June 2012 hearing, Mr Dimon said he did not have a role in deciding or implementing the change to the model for VAR, a standard industry measure of possible loss exposure."

It also noted that, "In an internal January 2012 company email published by the Senate investigations panel, Mr Dimon replied "I approve" to a request to raise the VAR limit pending the introduction of a new model. However, while the email shows Mr Dimon approving a temporary increase in the risk limit and being made aware of the new model, it does not show him approving a change in the model."

If investigators discover meaningful instances of perjury, they might recommend to the Justice Department and others that specific executives be charged with fraud. This has happened before. The same committee made a referral to the Justice Department back in 2011 that Goldman Sachs executives including CEO Lloyd Blankfein be prosecuted for perjury in the wake of the release of a blockbuster report about the bank's CDO activity. That forced several top executives to lawyer up, hiring top criminal defense attorneys. 

Eventually, however, the department decided not to file charges.

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