SEC Comment Letter for JPMORGAN CHASE & CO (JPM, AMJB, VYLD, JPM-PC, JPM-PD, JPM-PJ, JPM-PK, JPM-PL, JPM-PM) (CIK 0000019617) (JPM) — Jan 8, 2010
JPMORGAN CHASE & CO (JPM, AMJB, VYLD, JPM-PC, JPM-PD, JPM-PJ, JPM-PK, JPM-PL, JPM-PM) (CIK 0000019617)
Date: Jan. 8, 2010 · CIK: 0000019617 · Accession: 0000000000-10-001421
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-05805
Letter
DIVISION OF CORPORATION FINANCE UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 December 23, 2009 By U.S. Mail and Facsimile to: (212) 270-1604 Mr. Michael J. Cavanagh Chief Financial Officer JPMorgan Chase & Co. 270 Park Avenue New York, NY 10017
Re: JPMorgan Chase & Co. Form 10-Q for the Quarterly Period Ended June 30, 2009 Form 10-Q for the Quarterly Period Ended September 30, 2009 File No. 001-05805
Dear Mr. Cavanagh:
We have reviewed your letter filed on November 6, 2009 and have the following comments. Form 10-Q for the quarterly period ended June 30, 2009
Consolidated Financial Statements Notes to Consolidated Financial Statements Note 15 – Loan Securitizations, page 139
1. We note your response to comment 1 of our le tter dated October 9, 2009 as it relates to the Firm’s exchange of $3.5 billion of undivided seller’s interest for zero coupon subordinated securities. Pl ease respond to the following:
• Tell us whether you gave up your right to receive interest income on the seller’s interest exchanged, and if so, whether a ny loss was recorded upon the exchange. If not loss was recorded upon the exchange, pleas e explain, and as part of your response tell us how the guidance in AS C 835-30 (APB 21) was considered.
• Tell us the effective interest rate you are using to measure the zero coupon subordinated securities for impairment. To the extent that you are using an effective
Mr. Michael J. Cavanagh JPMorgan Chase & Co. December 23, 2009 Page 2 interest rate of zero, please te ll us why this is appropriate. 2. We note your response to comment 1 of our le tter dated October 9, 2009 as it relates to the Firm’s transfer of receivables designate d as “discount receivables” to the Trust, thereby requiring collections of such discount ed receivables to be applied as finance charge collections in the Trust. Please provide us with the following:
• Tell us the terms of the loans transferre d to the Trust under the discount option and whether there was anything else you received in the exchange; • Tell us how the rights to the cash flows unde r the “discount receivables” compare to the loan cash flows transferred to the Trust; • Tell us how you accounted for th e “discount receivables”; • Tell us whether there was any gain or loss recognized on the discount option exchange. If not, please explain why; and • Explain, in more detail, the Firm’s e xpectation to discontinue designating a percentage of the new receivables as di scount receivables on July 1, 2010 (e.g., how was this determined, can the Firm modify this date, etc).
Closing Comments
Please respond to this comment within ten bus iness days or tell us when you will provide us with a response. Your re sponse letter should key your respons e to our comment and provide any requested information. We may have addi tional comments after re viewing your response. You may contact Benjamin Phi ppen, Staff Accountant, at (202) 551-3697 or me at (202) 551-3423 if you have questions. Sincerely,
Amit Pande Accounting Branch Chief
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DIVISION OF CORPORATION FINANCE UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 December 23, 2009 By U.S. Mail and Facsimile to: (212) 270-1604 Mr. Michael J. Cavanagh Chief Financial Officer JPMorgan Chase & Co. 270 Park Avenue New York, NY 10017 Re: JPMorgan Chase & Co. Form 10-Q for the Quarterly Period Ended June 30, 2009 Form 10-Q for the Quarterly Period Ended September 30, 2009 File No. 001-05805 Dear Mr. Cavanagh: We have reviewed your letter filed on November 6, 2009 and have the following comments. Form 10-Q for the quarterly period ended June 30, 2009 Consolidated Financial Statements Notes to Consolidated Financial Statements Note 15 – Loan Securitizations, page 139 1. We note your response to comment 1 of our le tter dated October 9, 2009 as it relates to the Firm’s exchange of $3.5 billion of undivided seller’s interest for zero coupon subordinated securities. Pl ease respond to the following: • Tell us whether you gave up your right to receive interest income on the seller’s interest exchanged, and if so, whether a ny loss was recorded upon the exchange. If not loss was recorded upon the exchange, pleas e explain, and as part of your response tell us how the guidance in AS C 835-30 (APB 21) was considered. • Tell us the effective interest rate you are using to measure the zero coupon subordinated securities for impairment. To the extent that you are using an effective Mr. Michael J. Cavanagh JPMorgan Chase & Co. December 23, 2009 Page 2 interest rate of zero, please te ll us why this is appropriate. 2. We note your response to comment 1 of our le tter dated October 9, 2009 as it relates to the Firm’s transfer of receivables designate d as “discount receivables” to the Trust, thereby requiring collections of such discount ed receivables to be applied as finance charge collections in the Trust. Please provide us with the following: • Tell us the terms of the loans transferre d to the Trust under the discount option and whether there was anything else you received in the exchange; • Tell us how the rights to the cash flows unde r the “discount receivables” compare to the loan cash flows transferred to the Trust; • Tell us how you accounted for th e “discount receivables”; • Tell us whether there was any gain or loss recognized on the discount option exchange. If not, please explain why; and • Explain, in more detail, the Firm’s e xpectation to discontinue designating a percentage of the new receivables as di scount receivables on July 1, 2010 (e.g., how was this determined, can the Firm modify this date, etc). Closing Comments Please respond to this comment within ten bus iness days or tell us when you will provide us with a response. Your re sponse letter should key your respons e to our comment and provide any requested information. We may have addi tional comments after re viewing your response. You may contact Benjamin Phi ppen, Staff Accountant, at (202) 551-3697 or me at (202) 551-3423 if you have questions. Sincerely, Amit Pande Accounting Branch Chief