Following the London Whale trading scandal that cost JP Morgan at least $6 billion, Chairman and CEO Jamie Dimon is facing pressure from shareholders, who will hold a vote at the annual general meeting on May 21 to potentially split his roles. The failed trade originated from a trading desk that was meant to help the company reduce risk. It sparked a Senate investigation that ultimately concluded that the company misled regulators by mislabeling the portfolio of trades.
But rather than bring the hammer down on the head of the company, some are now potentially moving to vote against other shareholders who serve on the risk committee – Ellen Futter in particular, who is president of the American Museum of Natural History and a former director of AIG. At last year’s meeting, before the full effect of the London Whale trade was known, 14 percent of the vote was cast against her re-election.
While some shareholders may feel it is better to hold the risk management committee accountable and oust those who don’t have as much experience at financial institutions, Flutter’s expulsion would follow a disconcerting trend of laying the blame with women when things go wrong in the financial industry.
When the failed trade first surfaced, the first head to roll was not the London Whale himself, and Jamie Dimon managed to stay mostly insulated. Rather, the first person to step down was a woman: Ina R. Drew, JP Morgan’s Chief Investment Officer who was in charge of the division in which the trades were made. Drew was among the highest paid women in finance, being one of the top paid officials at JP Morgan. She has since been replaced by two men.
Similar resignations or firings happened during the chaos of the financial crisis. Erin Callan of Lehman Brothers and Zoe Cruz of Morgan Stanley were both high-ranking executives who may have been scapegoated when their companies faltered. This is what Michelle Ryan, an associate professor at Exeter University, has dubbed the “glass cliff”: “women often tend to occupy these dangerous leadership positions in dangerous times, when things are getting hairy,” she says. When things do go south, then, the women take the hit.
There were likely valid reasons for each of these women to be let go when they were. Drew, after all, oversaw the division making risky trades, although the risks of those bets were conveyed to top executives and dismissed. But they fit a trend in which female executives were three times as likely to lose their jobs in the recession.
Women already make up a small share of leadership positions in the United States, and in finance in particular. They hold 8.6 percent of executive officer roles in the finance and insurance industries and less than 20 percent of board director positions. If they are more likely to get ousted when a company hits troubled times, those numbers will continue to be depressed.