Morgan Stanley Analyst Discusses Ways for JPMorgan Chase to Recover

June 25, 2012 by · Leave a Comment
Filed under: General 

Amidst additional disclosures regarding its $2 billion loss and subsequent investigations, Morgan Stanley analyst Betsy Graseck painted a slightly brighter picture for the banking giant, noting that investors could see an “upside surprise.”

Although banking regulators, the United States Securities and Exchange Commission (SEC), and, reportedly, the Federal Bureau of Investigation (FBI) have opened inquiries into JPMorgan Chase’s hedging activities surrounding the loss, Graseck believes that answers to three questions could be “key to getting investors back into [JPMorgan Chase].”

First, “who knew what and when?” asks Graseck. This information is “critical to understand who in the organization” was aware of any accounting changes related to the loss.

Second, Graseck would like to see “more specific details on the components of the trade, size of the trade, strategy employed, and how that strategy was executed over time.”

Lastly, Graseck feels Dimon and JPMorgan Chase should provide “more detail on the latest mark-to-market of the position, size, max loss, and color on how analysts can potentially better forecast [the] ultimate loss.” The mark-to-market positions taken by JPMorgan Chase were seen as exceptionally risky for such a large bank, thus troubling investors.

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