In brief: FBI explores JPMorgan loss
The FBI has opened a preliminary inquiry into the $2 billion trading loss at JPMorgan Chase & Co.
“We are aware of the matter and are looking into it,” said a Justice Department official who has been briefed on the probe but was not authorized to speak publicly. “This is a preliminary look at what if anything might have taken place.”
The inquiry by the FBI’s financial crimes squad in New York is in a “preliminary infancy stage,” the official said Tuesday, and federal law enforcement agents are pursuing the matter “because of the company and the dollar amounts involved here.”
The FBI joins the Federal Reserve, the Securities and Exchange Commission and regulators in Britain in investigating the loss on trades meant to help protect JPMorgan against credit risk. Instead, the complex trades backfired, causing a huge hit to the bank’s bottom line and its reputation.
Meanwhile, a shareholder proposal to separate the roles of chairman and chief executive of J.P. Morgan Chase & Co., both held by Jamie Dimon, was defeated Tuesday at the bank’s annual meeting, with investors raising various concerns but not delving too much into the $2 billion-plus trading loss disclosed last week.
Builders’ confidence high
WASHINGTON – Confidence among U.S. builders rose to the highest level in five years in May, a hopeful sign that modest improvement in the housing market will pick up.
The National Association of Home Builders/Wells Fargo builder sentiment index rose to 29 in May. That’s the highest reading since May 2007 and up from a downwardly revised reading of 24 in April.
The index rose for five straight months before leveling off in March and falling in April.
Still, any reading below 50 indicates negative sentiment about the housing market. The index hasn’t hit that level since April 2006, the peak of the housing boom.
Homebuilders reported improving sales and higher traffic from prospective buyers. A gauge measuring confidence in sales over the next six months also rose, to 34 from 31.
Activist buys stake in PepsiCo
NEW YORK – Activist investor Ralph Whitworth said Tuesday that his firm has taken a $600 million stake in PepsiCo Inc., a move that could ramp up pressure on the company to make changes.
PepsiCo has faced investor dissatisfaction in recent years over its underperforming stock price and loss of market share to Coca-Cola Co. That’s led to speculation in the past that CEO Indra Nooyi will step down and that the company will split up its soda and snacks businesses.
Whitworth, the co-founder of San Diego-based Relational Investors, said that his firm has accumulated a 0.6 percent stake in the food and beverage giant since last fall. The holding is expected to be disclosed this week in a regulatory filing with the Securities and Exchange Commission.
Virgin Atlantic allows calls
NEW YORK – The phrase “Can you hear me now” has entered the jet age.
Passengers on certain Virgin Atlantic flights are now able to use their cellphones to make and receive phone calls at 35,000 feet, the airline announced Tuesday.
Only six passengers at a time will be able to use the system, which the airline says is intended “for use in exceptional situations.” Passengers will be able to send text messages, make a call or access email on mobile devices. The airline won’t charge extra for the service but cellphone users will be charged their carrier’s international roaming rates.