The board of JPMorgan Chase & Co. (JPM) is expected to shake up its risk policy committee in the wake of more than $2 billion in trading losses, said people familiar with the matter.
Directors Timothy Flynn and James Bell, who joined the New York company's board over the past year and have backgrounds in risk and finance, are considered candidates to join the committee, these people said. At least one director is expected to join the risk panel at the board's next meeting, a person familiar with the bank said.
The change was in the works before the company on May 10 disclosed losses tied to wagers on corporate-credit indexes placed by a unit called the Chief Investment Office, which included a trader who has been called the "London whale" for his market-moving bets, the person said.
The blowup at the nation's largest bank by assets has raised questions among shareholders about the strength of risk controls and the level of oversight at the board, and tarnished the risk-management reputation of Chairman and Chief Executive James Dimon. Shares of JPMorgan have dropped 18% since the losses were disclosed, wiping $27 billion off the company's market value. They were down 55 cents, or 1.6%, at $33.42 Friday afternoon.
The risk panel currently is chaired by James Crown, who is president of investment firm Henry Crown & Co., and includes two other members: Ellen Futter, the longtime president of the American Museum of Natural History, and Honeywell International Inc. (HON) Chief Executive David Cote. None of the directors could be reached for comment. It isn't clear whether any of the current risk-committee members will leave the panel.
The risk policy committee is responsible for "oversight of the CEO's and senior management's responsibilities to assess and manage the firm's credit risk, market rate risk, interest rate risk, investment risk, liquidity risk and reputational risk," according to regulatory filings.
Mr. Flynn, who joined the board this month, is former chairman for accounting firm KPMG International and former CEO of its U.S. unit. Mr. Bell, who joined last November, retired April 1 as chief financial officer for aerospace giant Boeing Co. (BA). Mr. Bell could leave the audit committee as part of the shift, one of the people said.
