Regulatory Actions Continue To Mount Against JPMorgan Chase & Co., But With Bank's Profits Soaring Don't Expect Many Pitchforks From Shareholders Against Chief Jamie Dimon

The regulatory problems are mounting for JPMorgan Chase & Co. (NYSE:JPM), but none are likely to faze shareholders and clients as long as the bank continues to fatten their portfolios.

Jamie Dimon, the bank’s chairman and CEO, met last month in New York with the federal Office of the Comptroller of the Currency (OCC). During that meeting, Dimon was given a stern warning that JPMorgan was losing favor in Washington, according to a government document that was reviewed by the New York Times. The OCC is considering taking legal action against the bank for allegedly using faulty documents to expedite lawsuits against credit card defaulters, a process similar to the “robo-signing” involved in home foreclosures that got 13 banks slapped with a $9.3 billion settlement in February for sketchy expedited home-foreclosure approvals.

The OCC is also looking into whether bank officials knew about imprisoned Ponzi schemer Bernie Madoff’s shenanigans but failed to alert authorities.

In both cases the OCC could slap JPMorgan on the wrist with a fine -- the kind that typically comes with a disclaimer that allows companies to pay penalties without admitting any guilt.

The OCC and the Federal Reserve Bank of New York have said that they do not trust the management of the bank, according to the Wall Street Journal. The government agencies have not commented publicly on the allegations, but a source told the paper without elaborating that regulators are demanding changes within the next 30 days.

In a separate regulatory inquiry, the Federal Energy Regulatory Commission (FERC) could go after the bank over alleged misrepresentations of electricity contracts in Michigan and California that led to overpayments.

The FEC alleges that Blythe Masters, the head of the bank’s global commodities operations, made numerous false statements regarding her knowledge of “schemes” perpetuated by a group of Houston energy traders.

JPMorgan is also facing an ongoing investigation into last year’s $6.2 billion in trading losses, dubbed the London Whale scandal, which undermined the bank’s longstanding reputation of being good with risk management.

The bank is holding its annual shareholders meeting on May 21 in Florida, where the management will face a non-binding shareholder vote to split the role of chairman and chief executive, which are currently combined and held by Dimon.

But the bank has also seen record profits. In the first quarter it earned $6.5 billion in net income, or a record $1.59 per share.

With that kind of cash, a majority of shareholders aren’t likely to raise pitchforks and torches and call for a management shakeup. Most likely, they will see any penalties paid to regulators as the cost of doing business.

“As long as you’re making money, investors don’t care,” Paul Miller, a managing director at FBR, told Dealbook in a report published Thursday night.