JPMorgan Chase & Company (JPM) has paid back more than $28 million in frozen auction-rate securities to Missouri investors, bringing the total amount returned to Missourians to more than $2 billion. The repayment was done under a finalized consent order with Secretary of State Robin Carnahan.
Regarding auction-rate securities, JPMorgan is the seventh major firm to sign an agreement with Carnahan’s office. The consent order covers Missouri individual and small business clients. JPMorgan completed the signings of the consent order earlier this year.
The company will also pay $86,000 to the Missouri Investor Education and Protection Fund, which serves educational initiatives for investors across the state.
The Securities Division in Carnahan’s office seeks to finalize repurchases with several other firms in the coming months. The division also actively investigates the auction-rate securities activities of several other brokers for which it expects to announce more formal actions before the end of the year.
The collapse of the $330 billion auction-rate securities market in February 2008 weighed on investors as they were unable to dispose of illiquid investments.
Though JPMorgan’s results for the last few quarters benefited from a strong performance by the investment bank and other segments, Consumer Lending and Card Services deteriorated due to continued high levels of credit costs. We anticipate continued synergies from the company’s diversification and strong capital position, but increasing provisions and worsening credit quality will be a drag on upcoming results. Therefore, we are recommending the shares as Neutral.
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