Things were going swimmingly for JPMorgan Chase & Co. (NYSE:JPM) last week, with the share price nearly touching $50 on Wednesday, when news of yet another lawsuit hit the wires: this one by California’s top law enforcement official, sending share prices plummeting.
Following on the heels of that, and after being down further in weekend trading, the superbank’s stock had opened down today. But two hours into the new trading week, it’s turned itself around and is now up a solid 0.55%. Chalk up this positive response to negative news to perhaps a fundamental faith in the country’s biggest bank: faith I believe is well warranted.
Return of the robo-signers
California attorney general Kamala Harris announced on Thursday her office was filing suit against JPMorgan Chase & Co. (NYSE:JPM) for engaging in “widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.”
The state is asking for a penalty of $2500 per violation, which could add to a total of $250 million for JPMorgan, if the case ends up going California’s way. There’s no word from JPMorgan Chase & Co. (NYSE:JPM) yet on the suit.
Foolish bottom line
Robo-signing entered the common lexicon in 2010, as news broke that many of the nation’s biggest banks — including JPMorgan, Bank of America, and Wells Fargo — were severely cutting corners in the way they handled home foreclosures. Basically, bank employees who were supposed to be reviewing foreclosures carefully and only then signing off were instead signing their names without actually reviewing the paperwork.
This California robo-signing suit has just been filed, and the allegations are just that — allegations — but people will lump this in to all the other bad press JPMorgan Chase & Co. (NYSE:JPM) has been getting since the London Whale trading scandal came to light last year. As such, they will probably assume the bank is guilty as charged.
This comes at a tricky time for JPMorgan and its CEO and chairman Jamie Dimon, who’s facing a shareholder vote on May 21 to consider appointing an independent chairman. The vote is non-binding, but it’s news like this — piled onto to everything else — that may compel the board to take the proposed proxy action regardless.
What this all boils down to is, the superbank’s stock is in an extremely volatile state right now. It doesn’t take much to send shares plummeting. But investors seem defiant today, as they should be long term, as well. The bank reported record income in the first quarter, on top of three previous straight years of record income. What exactly are investors looking for out of JPMorgan Chase & Co. (NYSE:JPM) and its long-serving CEO/COB?