JP Morgan CEO Jamie Dimon is usually a font of wisdom, but if he actually means what he’s quoted as saying on Charlie Rose, he has gone temporarily insane:
Reuters: JP Morgan Chase & Co Chief Executive Jamie Dimon said U.S. regulators should investigate whether people betting on Bear Stearns’ stock falling deliberately brought down the investment bank.
“Where there is smoke, there’s fire,” Dimon said in an interview with Charlie Rose on PBS, televised on Monday. “I think the Securities and Exchange Commission should investigate it, OK? I think if someone knowingly starts a rumour or passes on a rumour, they should go to jail.”
Should the SEC investigate what happened to Bear Stearns? Of course. Did “rumours” actually bring the firm down? Give us a break. Companies are slammed by rumours every day of the week. The only ones that fail are those that have taken on way too much debt and have already lost the trust of the market.
We assume what Dimon means is that people who knowingly start or pass on FALSE rumours should go to jail, but even that seems a stretch. Where, exactly, does a hunch or an opinion become a “rumour”? Do we all need to hire fact checkers before we pick up the phone?
UPDATE: Here’s the transcript of this section of Dimon’s interview with Charlie Rose:
ROSE: How did this happen to Bear Stearns?
DIMON: I honestly — I don’t know. And I think there could be a lot of things written about that. I think if you looked at Wall Street firms, they have more and more leverage, more and more liquid assets. I have read the same stories you have about the rumours — there are rumours out there that people are driving down the stock, shorting their credit derivative.
ROSE: Alan Fords is quoted as saying, and I would like to talk to him about it specifically, that he thought it was premeditated.
DIMON: Right. I would say where there is smoke there fire. I have heard it. I don’t have evidence of it. I think the Securities Exchange Commission should investigate it. I think that if that — if someone knowingly starts a rumour or passes on a rumour, they should go to jail. And let me finish. The SEC has been very careful not to examine rumours. It’s hard to capture rumour. You don’t really know.
This is even worse than insider trading. This deliberate and malicious destruction of value and people’s lives. They shouldn’t go to jail for a short period of time. If I was the FCC, I would find out who made the money, and I would investigate like they do when they come all the time, e-mails, phone records, you name it. And I would find out. Now I don’t know if that is true. I really don’t know. But I think it’s — there has been enough smoke around that I think there should be a full investigation on it.
ROSE: It started with people coming in the run on the bank. That is how it got started. Because the hedge funds had fallen. They had to —
DIMON: Maybe; I really don’t know. And someone could legitimately be shorting a stock. That is not the same as illegitimately passing rumours to drive it down more to make money. You know, Brian Burrow’s article referred to there was a party one night that a bunch of people met and went out and celebrated Bear’s demise. And I would like to find out who was there.
Dimon makes his “crazy” remark, and then clarifies that what he said is already illegal: stock manipulation. So, what’s he talking about here?
See Also: Bye Bye, Bear Stearns
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