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September 10, 2013

JPMorgan Raises Legal Reserve by at Least $1.5 Billion

“JPMorgan Chase & Co. (JPM), the biggest U.S. bank by assets, increased its litigation reserve by more than $1.5 billion in the third quarter to help cover a “crescendo” of potential legal claims.

“’This addition to reserves covers a number of different matters, some of which you’ve been reading about,’ Chief Financial Officer Marianne Lake said yesterday at the Barclays Global Financial Services Conference in New York. ‘There’s been a crescendo of activity in past weeks and we are reacting to that where it makes sense.’

JPMorgan added 3,000 employees to bolster internal controls and compliance as it grapples with multiple investigations and regulatory orders, Lake said. The U.S. is conducting criminal investigations linked to the bank’s energy-trading and mortgage-backed securities businesses as well as separate probes of its anti-money-laundering safeguards, foreclosures, credit-card collections and a record trading loss in London last year.

While executives think they’ve set aside enough money to cover the bank’s legal expenses for the quarter, the final cost could change, said Lake, 43. She declined to give an estimate for how large the litigation reserve might become.”

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Read full Bloomberg article here

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