By David Henry and Nadia Damouni
NEW YORK Aug 21 JPMorgan Chase & Co is
close to naming two new directors with finance and risk
management expertise to its board, a source close to the matter
said, as the largest U.S. bank faces a new wave of regulatory
The bank has identified the candidates but the board has not
yet voted on them, the source said on Tuesday, adding that a
decision is likely to come in September. The names of the
candidates could not be learned, although sources have said that
Chairman and Chief Executive Jamie Dimon has extensive say in
who is named to the board.
The new directors, who replace long-time board members David
Cote and Ellen Futter, will join at a tense time for the bank.
JPMorgan has become the target of several new investigations,
the most recent of which, according to a source familiar with
the probe, is a preliminary inquiry by the U.S. Department of
Justice into whether the bank had manipulated energy markets.
JPMorgan's board has been pressuring Dimon to improve the
bank's relationship with regulators, after a U.S. Senate
subcommittee report in March detailed how the executive demanded
the bank withhold trading data from one of its regulators, and
later yelled at a subordinate who provided the data.
The onslaught on the bank is a distraction for JPMorgan
executives but is unlikely to let up until regulatory focus
turned to another bank, the source said. Dimon, the source said,
was "stoic" as he navigates the situation.
Another person who knows Dimon said the CEO dislikes having
to spend so much time at management and board meetings
discussing probes and settlements instead of regular business.
Dieter Waizenegger, executive director of the CtW Investment
Group, which had campaigned this year against the re-election of
Cote and Futter, said he hopes that new board members have
experience in bank regulation so that they can help repair the
company's standing with the government and better guard against
The so-called London Whale trades cost the bank more than $6
billion and have led to criminal charges against two of its
former traders. Cote and Futter, who came under investor fire
for failing to prevent the losses, resigned in
"The company got off on the wrong foot with
regulators earlier this year, so someone who understands this
would be helpful," said Waizenegger, whose group is a JPMorgan
All told, JPMorgan is subject to more than a dozen probes in
In addition to the Justice Department probe, investors
recently learned that the U.S. Securities and Exchange
Commission is investigating whether the bank ran afoul of laws
that forbid bribery overseas. The bank has also said that a
federal investigation in California had preliminarily concluded
that the bank violated securities law when it sold mortgage
bonds from 2005 through 2007.
The heightened scrutiny could weigh on profits at the bank,
which said in its most recent quarterly filing with regulators
that additional losses from litigation, beyond what it has
already set aside, could be up to $6.8 billion.
Charles Peabody, a banking analyst at Portales Partners,
said litigation costs for JPMorgan and other firms could rise in