(Corrects name of the Fox Business Network in paragraph 8)
By Rick Rothacker and David Henry
Jan 24 A federation of U.S. labor unions is
looking to force JPMorgan Chase's board to consider
breaking up the company after the disastrous "London Whale"
affair, but the bank is trying to ensure that its shareholders
do not get to vote on the union's proposal.
The largest U.S. bank is seeking permission from the U.S.
Securities and Exchange Commission to omit the proposal from the
measures that shareholders vote on this spring, according to a
letter sent to the agency on January 14.
The AFL-CIO's Reserve Fund, a union fund that owns JPMorgan
shares, wants the bank's board to form a committee that would
explore "extraordinary transactions that could enhance
stockholder value," including breaking off one or more of the
company's businesses. The panel should hire third-party advisers
and make a report to shareholders 120 days after this spring's
annual shareholder meeting, according to the proposal.
The bank has become too big manage, the proposal said,
citing more than $6 billion in losses last year by a trader
nicknamed the "London Whale" in the bank's Chief Investment
Office in London.
"In our view, the evidence is mounting that JPMorgan has
reached the point where stockholders would benefit from
restructuring," the AFL-CIO said in its proposal.
In its letter to the SEC, lawyers for JPMorgan said the
proposal should be blocked from being included in the bank's
proxy filing because it involves the company's ordinary
business, an exclusion allowed under SEC rules. The letter also
says the proposal includes "false and misleading" statements and
is "vague and indefinite."
Spokespersons for JPMorgan and the SEC declined to comment
on the proposal.
In response to a question in an interview on Fox Business
Network on Thursday, JPMorgan CEO Jamie Dimon said there is no
reason for the bank to break up or spin-off businesses.
"We are in four businesses. They are all doing very well,"
he said. "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."
Heather Slavkin Corzo, senior legal and policy advisor with
the AFL-CIO, said the union is preparing a response to
JPMorgan's letter for the SEC. The union hasn't previously
submitted a proposal calling for this kind of action, she said.
"We think it's important that they take a look at some
potential extraordinary transactions that could maximize
shareholder value," Slavkin Corzo said.
(Reporting By Rick Rothacker in Charlotte, N.C., and David
Henry in New York; Editing by Nick Zieminski)