Oct. 4–Jamie Dimon, chairman and chief executive officer of Bank One Corp., said an internal review into the company’s involvement in any rapid-fire trading of mutual funds is continuing.
But Dimon, who was in Detroit Friday visiting customers, acknowledged for the first time that several people likely will be leaving the company because of the big mutual fund scandal. He did not elaborate, and nothing has been announced because the review is continuing.
“It is reasonable under circumstances like this that that would be the outcome — that people would have to leave the company,” said Dimon, whose company has a significant market share in Michigan.
The mutual fund scandal is the largest in the history of such funds. It was set in motion last month by New York Attorney General Eliot Spitzer, who named four mutual fund companies in his complaint: Bank One, Strong Capital Management, Janus Capital Corp. and Bank of America Corp.
In the Bank One case, Spitzer outlines a scenario in which Bank One allowed Canary Capital Partners to rapidly trade, in some cases daily, some Bank One mutual funds. Spitzer’s complaint said the trading deal ran for about a year. Canary is a hedge fund, an investment vehicle for wealthy individuals.
Any deal to allow rapid-fire trading with Bank One funds would not be illegal. But such an arrangement for a wealthy client would go against small investors who would share any extra trading costs. Typically, mutual funds say they discourage frequent trading of their funds.
Dimon told me he’s received letters demanding retribution or that someone be blamed and fired at Bank One. But Dimon said it’s important that the company take a careful look at what policies or errors have been made, if any. And that review is ongoing.
“You’ve got to do the right thing when you know what it is,” Dimon said. He quickly pointed out that only one company — and not his — has been alleged to have allowed after-hours trading, or late trading, of mutual funds. Late trading is illegal.
Spitzer claims Bank of America permitted the late trading and even went so far as to set up a special computer system to allow it with Canary.
Dimon noted that, while rapid trading is not illegal, he does believe it did happen in the industry and that more mutual funds than those that have been named have engaged in it.
Hoping to consolidate
When I chatted with Dimon at Bank One’s suite at the Detroit Athletic Club, we spoke on many topics, ranging from bank acquisitions to checking accounts to the Chicago Bears.
I asked Dimon, known by analysts as a “deal guy,” whether he would be taking over another big banking name, say a KeyCorp or a PNC Financial Services Group or even Detroit’s own Comerica Inc., in the future.
His answer: “We hope to be a consolidator.”
For 3 1/2 years as CEO, Dimon has focused on cleaning up Bank One’s balance sheet, pushing service and making it a stronger player.
Improving the company, he said, was key before it aspired to do other things, such as merging with another company.
“We would almost be ready now,” Dimon said.
Dimon said his attitude has been to fight for every inch of business. “If you don’t want to win, you don’t win,” he stated. “It’s not something you learn in business school. It’s something you learn in your heart.”
Dimon said Bank One didn’t have great service in the past, but the bank has boosted its hours in various markets, now offers free online banking and strives to satisfy every checking account customer.
Sign up for a Bank One account, he said, and you’ll be called three days later, 30 days later and a third time six months later.
He’s noted that it’s important to keep customers happy early on and determine if they’ve got the checking account that suits them.
As for the Bears?
Bank One is in the first year of a 12-year, $30-million partnership with the football team. Among other things, it allows the bank to have ATMs at new Soldier Field.
Dimon said he attended the Bears game Monday night. As for other games this year? He says he has no plans to attend more now. He noted that he has two teenage daughters at home and doesn’t usually attend many sporting events.
“And I don’t play golf either,” he said.
JAMIE DIMON
TITLE: Chairman and chief executive officer of Bank One Corp., based in Chicago
AGE: 47
FAMILY: Wife, three teenage daughters
HOME: Chicago. Native of Queens, N.Y.
CAR: Mercedes CLK430
BANK ONE CREDIT CARD: United Mileage Plus
CHARITABLE BOARDS: Harvard Business School, the University of Chicago, the National Center on Addiction and Substance Abuse, the United Negro College Fund, and Mt. Sinai-New York University Medical Center and Health Systems.
CORPORATE BOARDS: Yum! Brands Inc., which owns fast-food restaurants KFC, Pizza Hut and Taco Bell.
BANK ONE PROFILE: It’s a big credit card issuer. Bank One is the sixth-largest bank in the United States. It is the No. 3 bank, based on deposits, in the Detroit area. Its Detroit roots go back to the former NBD Corp. Bank One has 240 branches in Michigan and 375 ATMs. It employs 5,000 people in Michigan.
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(c) 2003, Detroit Free Press. Distributed by Knight Ridder/Tribune Business News.
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