Regulators are considering changes to the way big banks operate in light of JP Morgan’s (NYSE: JPM) recent loses. Meanwhile, financial exchange traded funds have been reeling in the aftermath.
Financial sector ETFs, like Financial Select Sector SPDR (NYSEArca: XLF), Vanguard Financials ETF (NYSEArca: VFH) and iShares Dow Jones US Financial Sector (NYSEArca: IYF), have dropped about 4% over the past week.
JP Morgan has plunged almost 21% since revealing its $2 billion trading loss on synthetic credit products, reports Jonathan Stempel for Reuters. [Financial ETF Pares Decline After JP Morgan Loss]
On Monday, a complaint was filed with the U.S. District Court of Manhattan that accused JPMorgan of violating their duties to 401(k) and other retirement participants.
“The plans suffered hundreds of millions of dollars of losses,” the complaint said. “If defendants had discharged their fiduciary duties to prudently manage and invest the plans’ assets, the losses suffered by the plans would have been minimized or avoided.”
After the heavy losses, the dangers of regulating large banks has once again been put under the spotlight.