Case Study JPMorgan Chase

“JPMorgan Chase & Co. is one of the largest banking institutions in the United States and a leader in investment banking, financial services for consumers and small businesses, commercial banking, and asset management. The company serves millions of customers in the United States and many of the world’s most prominent corporate, institutional and government clients.

In 2008, many financial analysts credited the firm and its CEO, Jamie Dimon, with being instrumental in saving two important financial services companies, Bear Stearns and Washington Mutual. JPMorgan Chase purchased these firms at the request of U.S. Treasury Secretary Henry M. Paulson in order to stabilize a rapidly unraveling but highly inter-connected international banking system. But, JPMorgan Chase’s reputation took a turn for the worse a few years later.

In 2012, Bloomberg News reported that JPMorgan Chase was behind massive trades that were distorting the world financial and commodities markets. A JPMorgan Chase employee based in London, Bruno Iksil, had apparently made securities trades that were so large that his trades were driving significant price movements worldwide. His influence on the market was so great that Iksil became known colloquially as “the London Whale.” In 2013, JPMorgan Chase was fined nearly $920 million due to Iksil’s trading losses, one of the biggest financial penalties ever assessed on a financial institution. A year later, JPMorgan Chase reached a $13 billion settlement with the U.S. Department of Justice over bad mort-gage loans previously made by its 2008 acquisitions of Bear Sterns and Washington Mutual.

Despite its legal troubles, JPMorgan Chase moved forward with plans to help Twitter under-write its initial public offering. The firm was interested in the public’s reaction to this event and opened up a social media channel. On the day that Twitter went public, a JPMorgan Chase employee managing the social media program tweeted on the account @jpmorgan, “What career advice would you ask a leading exec at a global firm? Tweet a Q using #AskJPM.” The idea was intended to give college students an opportunity to communicate directly with Jimmy Lee, a senior executive, according to JPMorgan Chase spokesman Brian Marchiony.

The company was not expecting what happened next. Some of the tweets included:

What’s your favorite type of whale? #AskJPM

Did you always want to be part of a vast, corrupt criminal enterprise or did you “break bad”? #AskJPM

My question: Why is JPMorgan Chase foreclosing on my neighbor after she’s paid for her house 4 times over? #AskJPM Disgusting.

How many $jpm bankers does it take to screw in a lightbulb? None, they just foreclose on the house. #AskJPM

By early afternoon of the day @jpmorgan went live, the Daily Beast editor and columnist Daniel Gross tweeted, “Oh my lord, the #askjpm session. Will go down as case study in corporate use of social media.”

Some think that in a social media climate, sarcasm rules, and as a result companies have much less control over how the public engages with their brand and how to manage its reputation. JPMorgan Chase was unprepared to deal with the public’s negative view of the bank and its actions, especially in the wake of a recession that some believed was caused in part by JPMorgan Chase’s irresponsibility. On November 13, 2013, a week after the original tweet by JPMorgan Chase, the company cancelled its original Q&A with Jimmy Lee and sent the following tweet to its followers:

Tomorrow’s Q&A is cancelled. Bad Idea. Back to the drawing board.”

“In total, 1,661 people retweeted the message. CNBC had actor Stacy Keach, the voice from its television documentary series American Greed, read the message cancelling the Q&A verbatim. His reading of the posted tweet from the #AskJPM became very popular on YouTube.

Even though JPMorgan Chase managed through the 2008 financial crisis without posting a quarterly loss and was able to purchase the nearly bankrupt Bear Stearns and Washington Mutual’s assets, some said that its reputation was tarnished. A business and law professor at the University of Michigan said, “It is a jolt of reality, and the reality for JPMorgan is ugly. The bank is highly visible and greatly disliked.”

In December 2014, JPMorgan Chase released a report called “How We Do Business” that described not only its business standards and practices but also reviewed how it had addressed recent challenges resulting from the fallout of the 2008 financial crisis. The report highlighted some of the company’s mistakes and its efforts to rearticulate and re-emphasize its cultural values and corporate standards—with the aim of ensuring that employees internalize and live by these standards. The report detailed many of the company’s efforts to strengthen its internal controls through improved infrastructure, technology, operating standards, and governance.”

Sources: Information for this case taken from JPMorgan Chase & Company’s How We Do Business—The Report, 2014, available at www.jpmorganchase.com; “JPMorgan Trader’s Positions Said to Distort Credit Indexes,” Bloomberg Business, April 6, 2012, www.bloomberg.com; “JPMorgan to Pay $13 Billion in Deal with US,” MSN Money, October 22, 2013, www.msn.com; “JPMorgan’s Twitter Mistake,” The New Yorker, November 16, 2013, www.newyorker.com; and “JPMorgan’s #AskJPM Twitter Hashtag Backfires against Bank,” Bloomberg Business, November 14, 2013, www.bloomberg.com”

1. What are the benefits and costs to JPMorgan Chase’s reputation given its use of a stakeholder question-and-answer session on Twitter? How do its various stakeholders now think of JPMorgan Chase’s image?
2. Would you define the incident as a crisis? Assume you are JPMorgan Chase’s CEO and are conducting a press conference: what main points about the incident should you emphasize to the media and convey to the public?

Question 1 must be 250-300 words with the core values of Saint Leo integrated in question 1. And Question 2 must be 250-300 words with the core values of Saint Leo integrated in question 2. Also, must use WEBSITES ONLY THAT ARE BASED IN THE UNITED STATES. APA Citation.