Pension Funds Still See Dollar Signs at JPMorgan Chase

Monday, June 18, 2012

California’s giant pension funds, California Public Employees' Retirement System (CalPERS) and California State Teachers Retirement System (CalSTRS), have been putting their money in JPMorgan Chase since 1973 and don’t appear to be in any hurry to alter the relationship in the wake of  the investment bank’s recent multi-billion-dollar trading loss.

“As a long-term investor, we focus on the longer-range performance of the company, which has been excellent,” according to CalSTRS spokesman Ricardo Duran. “This will likely be a quarterly loss for the company but is not expected to significantly impact our long-term returns.”

JPMorgan Chase CEO Jamie Dimon appeared before the Senate Banking Committee this week and its members, seven of whom are big recipients of contributions from the bank, generally fawned over him as he flashed cufflinks sporting the presidential seal and fended off questions about losses from the risky derivatives trading that might run as high as $5 billion.

The Securities and Exchange Commission, the FBI and the Commodity Futures Trading Commission are all conducting investigations of the trading loss. Federal prosecutors in New York have also reportedly contacted the bank. No one has been formally accused of any wrongdoing.

CalPERS owns more than 12.4 million shares of JPMorgan stock and CalSTRS has 12.2 million, each investment worth more than half a billion dollars. As of April 30, 2012, CalPERS managed investments of $236 billion and CalSTRS handled $153 billion.

While CalPERS hasn’t shown any interest in pulling its money out, it did back a  shareholder proposal in May to remove Dimon as chairman of the board. That proposal failed to gain more than 40% support.  Another proposal backed by the pension fund to compel greater disclosure of political contributions received less than 5% support.

–Ken Broder

To Learn More:

State Pension Funds Sticking with JPMorgan Despite $2B Loss (by Corey G. Johnson, California Watch)

CalPERS Sees Need for Independent Chair at JP Morgan (CalPERS)

J.P. Morgan's $2 Billion Blunder (by Dan Fitzpatrick, Gregory Zuckerman and Liz Rappaport, Wall Street Journal)

3rd U.S. Agency Said to Open Inquiry into JPMorgan Loss (by Ben Protess, New York Times)

Jamie Dimon's Presidential Cufflinks a Gift from a White House Resident (by Harry Bradford, Huffington Post)

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