By Emily Glazer
J.P. Morgan Chase & Co. said Stacey Friedman would become
the bank's general counsel, succeeding Stephen Cutler, who will
step down to become the bank's vice chairman.
Ms. Friedman, general counsel of J.P. Morgan's
investment-banking division, early next year will replace Mr.
Cutler, who has led the bank's legal efforts to deal with
unprecedented government scrutiny since the financial crisis.
The executive change will take place as the bank, the nation's
largest by assets, works to turn the page on a difficult period
with regulators. Under Mr. Cutler, the bank agreed to pay $13
billion to settle allegations regarding mortgage securities. This
year, J.P. Morgan pleaded guilty with four other banks to criminal
charges that they had colluded to move foreign-currency rates for
their own financial benefit.
Ms. Friedman, 47 years old, will report to Mr. Cutler as his
deputy fro the rest of 2015. She will join the bank's operating
committee next year when her new role begins. Mr. Cutler, who is 53
years old, will act as a "senior adviser" to J.P. Morgan Chairman
and Chief Executive James Dimon, other executives and the board of
directors, the bank said, adding that he will continue to assist on
complex legal issues, including matters already in progress.
Ms. Friedman is expected to work on an array of those issues,
including the investigation into whether J.P. Morgan's hiring
activities in Asia violated the U.S. Foreign Corrupt Practices Act.
The Securities and Exchange Commission is also discussing a
settlement with the bank over whether J.P. Morgan inappropriately
steered private-banking clients to its own investment products.
Mr. Cutler, a former regulator, is the latest senior J.P. Morgan
executive to move from his role, creating new opportunities for
younger executives but also testing Mr. Dimon's ability to rotate
key lieutenants. In the last 18 months, former Co-Chief Operating
Officer Michael Cavanagh and former Chief Financial Officer and
later Vice Chairman Douglas Braunstein both left the firm. Then, in
June, one of Mr. Dimon's top advisers and former vice chairman,
James B. Lee Jr., unexpectedly passed away.
When Mr. Cutler raised the issue of stepping down as general
counsel around 2014, Mr. Dimon tried to convince him to stay,
people familiar with the matter said.
But the long hours and the stress of being the top lawyer for
the nation's largest bank had taken a toll. Mr. Cutler is often in
the office around 6:45 a.m. and has typically worked 12-hour days,
people close to Mr. Cutler have said.
Next year "is the right time...to try something different," Mr.
Dimon recalled Mr. Cutler telling him.
The decision to name Mr. Cutler vice chairman of the bank became
official in recent weeks, some of these people said, adding that
Mr. Cutler wanted to ensure that there is work to do and it isn't
purely a symbolic role.
Mr. Cutler has been J.P. Morgan's top lawyer since 2007 and is
one of the longest-serving general counsels of a big U.S. bank. He
had previously worked in private practice and led the enforcement
division of the SEC.
Ms. Friedman joined J.P. Morgan three years ago from law firm
Sullivan & Cromwell LLP, where she worked with the bank for
over a year on matters ranging from mortgage-backed securities to
its purchase of the banking operations of Washington Mutual, the
bank said.
In a part of Wall Street where toughness is a prerequisite, Ms.
Friedman is also known for her "inexhaustible intellectual
curiosity" and for thinking creatively to avoid costly litigation,
said H. Rodgin Cohen, senior chairman at Sullivan &
Cromwell.
While at Sullivan & Cromwell, one of her marquee cases was
Cole v. Arkansas, a lawsuit challenging the constitutionality of an
Arkansas statute prohibiting unmarried, cohabiting couples from
serving as adoptive or foster parents. The court ruled in favor of
her teams' clients.
"That case was one of the best experiences I've had as a
lawyer," Ms. Friedman said in an interview on Sullivan &
Cromwell's website.
Prior to joining Sullivan & Cromwell, Ms. Freidman was a
clerk for U.S. District Judge Gary L. Taylor of the central
district of California and immediately before law school she worked
for Sen. Dianne Feinstein of California. She lives in Park Slope,
Brooklyn, with her wife and two children.
Mr. Cutler has been grooming Ms. Friedman for the last 12 to 18
months, including her in all of the bank's major legal cases,
including the recent foreign exchange settlements, people familiar
with the moves said.
In her most recent role working with J.P. Morgan's investment
bank, Ms. Friedman was responsible for more than 600 lawyers and
focused on reputational risk, regulatory change and client impacts
in more than 100 countries. The bank hasn't yet named a successor
for Ms. Friedman in that role.
Ms. Friedman has led the bank's ongoing litigation regarding
Washington Mutual, people familiar with the matter said. The bank
in early June won a legal battle in its effort to avoid billions of
dollars in potential liabilities from its purchase of Washington
Mutual Inc.'s banking operations during the financial crisis.
Write to Emily Glazer at emily.glazer@wsj.com
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