By Paul Hodgson – CCO and Senior Research Associate
Dimon in the Rough, Part 2
“While this does not reduce the losses already incurred and does not preclude future losses, it does reduce the probability and magnitude of future losses,” he said.
“While we can never say we won’t make mistakes—in fact, we know we will—we do believe this to be an isolated event,” he said.
“We became complacent,” Dimon said. “Never, ever get complacent.”
“I don’t know what the Volcker rule is. It hasn’t been written yet.”
He’s also recorded as saying that: the losses occurred because traders were poorly managed and did not understand what they were doing.
Hardly a recommendation for the bank. It’s not often you get to see a CEO squirm. And it’s interesting to see how many admissions he began with a qualifying clause.
Events Analyst Dovid Muyderman found this example of corporate justice in an 8-K filing from Orthofix on July 7th.
On June 6, 2012, Orthofix International N.V. (the “Company”) entered into a settlement agreement (the “BGS Settlement Agreement”) with the United States of America, acting through the United States Department of Justice (the “DOJ”) and on behalf of the Office of Inspector General of the Department of Health and Human Services (the “OIG-HHS”), the TRICARE Management Activity, through its General Counsel, the Office of Personnel Management, in its capacity as administrator of the Federal Employees Health Benefits Program, the United States Department of Veteran Affairs and relator Jeffrey J. Bierman. The BGS Settlement Agreement finally resolves (i) the previously disclosed government investigation surrounding the HIPAA subpoenas issued by the United States Attorney’s Office for the District of Massachusetts (the “Boston USAO”) on April 10, 2009, July 23, 2009 and June 3, 2010, respectively, and (ii) the previously disclosed qui tam complaint filed by Jeffrey J. Bierman in the U.S. District Court for the District of Massachusetts against the Company and Orthofix Inc. In connection with the BGS Settlement Agreement, the Company’s wholly-owned subsidiary, Orthofix Inc., entered into a plea agreement with the Boston USAO and the DOJ (the “Plea Agreement”) on June 7, 2012 under which Orthofix Inc. will plead guilty to one felony count of obstruction of a federal audit (§18 U.S.C. 1516). The Plea Agreement is subject to approval by the United States District Court for the District of Massachusetts. Under the BGS Settlement Agreement, the Company will pay $34,234,263 (plus interest at a rate of 3% from May 5, 2011 through the day before payment is made). Under the Plea Agreement, Orthofix Inc. will pay (i) a criminal fine of $7,765,737, and (ii) a mandatory special assessment of $400. The Company previously recorded a charge of $43 million during the first quarter of 2011 in anticipation of the settlement and related fees owed to counsel for Mr. Bierman.
That’s an awful lot of bodies on the prosecution side, a monstrous list. But what’s that $400 about?
Dovid also found this somewhat embarrassing situation for Farmer Mac in an 8-K from June 6th.
On June 6, 2012, the Corporate Governance Committee and the Board of Directors of the Federal Agricultural Mortgage Corporation (“Farmer Mac”) reconsidered their April 5, 2012 independence determinations and determined that director nominees Thomas W. Hill and Douglas E. Wilhelm would not be “independent” directors under Farmer Mac’s Corporate Governance Guidelines upon their election to the Board, and also withdrew the recommendation that those individuals be elected to the Board. Mr. Hill and Mr. Wilhelm remain on the ballot for election to the Board. The Board reconsiderations resulted from the recent receipt by Farmer Mac of additional information that related to a services agreement between Mr. Hill and Farm Credit Bank of Texas and a letter to Farmer Mac from Mr. Wilhelm disclosing ongoing discussions between Mr. Wilhelm and CoBank regarding a services agreement.
Odd those directors didn’t think to offer up this information at the time their candidacy was being first considered.