JPMorgan's Frank Acquisition Saga: Shutdown, Fraud Charges, and OCC Audit
JPMorgan Chase has faced a series of events surrounding its acquisition of the college-aid platform Frank. The bank shut down the platform in January and its founder, Charlie Javice, was charged with fraud in March. Meanwhile, JPMorgan's dealmaking has accelerated under CEO Jamie Dimon's directive, with 80 purchases and investments since 2020.
The saga began in December 2021 when JPMorgan sued Javice, alleging she misrepresented Frank's user base. Javice claimed the platform had 4.25 million users, but the actual number was fewer than 300,000. JPMorgan discovered the discrepancy after sending marketing materials to the larger list and finding low engagement.
The Office of the Comptroller of the Currency (OCC) has since scheduled an audit of JPMorgan's dealmaking, focusing on the Frank acquisition. This comes as JPMorgan continues to invest in various businesses, including banking-adjacent ventures like Nutmeg and Viva Wallet, and platforms further afield like Volkswagen's payments business and the Zagat guidebook. Despite regulations prohibiting JPMorgan from acquiring additional U.S.-based deposit-taking institutions due to its existing market share, the bank has made 80 purchases and strategic investments since 2020, accelerating its dealmaking under Dimon's leadership.
The OCC audit, scheduled before JPMorgan's lawsuit against Javice, will examine the bank's dealmaking processes. Meanwhile, Javice's fraud charges and the subsequent shutdown of Frank highlight the importance of thorough due diligence in acquisitions. JPMorgan's continued investment in diverse businesses, despite regulatory constraints, reflects its strategic approach to expansion.
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