JPM Refuses To Comply With Broad PFG Subpoena
Last week we wrote that we were not surprised to learn that the first party of interest in the PFG bankruptcy was "none other than JPMorgan, which together with various other banks, will be the target of a subpoena by the PFG trustee." We added "How shocking will it be to find that Dimon's company is once again implicated in this particular episode of monetary vaporization." It appears that we were not the only ones shocked to learn that Jamie Dimon's firm could make a repeat appearance again when it comes to missing client money: JPM itself seems to not have expected this development. The result, as just reported by Reuters: "JPMorgan Chase & Co on Monday sought to limit the power the bankruptcy trustee for Peregrine Financial Group has to subpoena information from financial institutions that did business with the failed brokerage." Why, whatever may JPMorgan be hiding, and whyever is it taking preemptive steps from preventing such information from leaking into the public domain: because it is too "burdensome" - it is only logical that Jamie can not dedicate one person of his 261,453 employees to this modest matter. No fear though: even if it is found that just like in the MF Global bankruptcy JPM may have overreached just a tad when it comes to money that doesn't belong to it, the CFTC can just say that as a result of an extensive 4 year investigation, JPM was found to have done nothing wrong, and if the public can please already disperse.
JPMorgan said in a court filing that Trustee Ira Bodenstein's request for authorization from a bankruptcy court to serve subpoenas on financial information may be overly burdensome by encompassing Peregrine's affiliates and wholly owned subsidiaries, in addition to the brokerage itself.
JPMorgan reserved the right to "modify or quash" subpoenas that are too burdensome or broad.
Bodenstein last week asked the court for the authority to require 10 financial institutions, including JPMorgan, to produce information about open and closed accounts maintained by Peregrine, its affiliates and subsidiaries.
What is the "legal" basis that JPM demands to be let off the subpoena hook?
Bodenstein said in an interview on Monday that his request to serve subpoenas was "pretty standard," and JPMorgan said in the filing that it did not object to the court granting him the general authority to issue subpoenas upon the bank.
However, JPMorgan said the "conditions upon which the trustee seeks to conduct the proposed examination are anything but 'routine.'"
JPMorgan also objected to Bodenstein's request that the bankruptcy court prohibit subpoenaed financial institutions from recouping any costs incurred with providing documents.
Because obviously JPM is pennypinching like a modest regional bank now that it no longer is able to mismark hundreds of billions in CDS (which no longer have the implied backstop of the Fed).
As for why JPM is suddenly hiding behind a quash order, we doubt this needs any particular clarification: after all Jamie Dimon is sick and tired of pretending to be questioned by his part-time employees in Congress and Senate. Another MF Global-like spectacle may be good for politician and C-SPAN ratings, but will hardly delight JPM's shareholders.