FT: U.S. Regulators Check How JP Morgan Conducted Startup Valuations

The US Commercial Banking Commission (OCC) has appointed an audit of JP Morgan’s activities in the field of company valuation (due diligence) before buying them, the newspaper reports. Financial Times. Observers suggest that this check may be caused by the situation around the startup Frank and its founder Charlie Javis, who, according to the US Department of Justice, deceived JP Morgan to inflate the company’s value.

In 2021, the bank bought Frank for $175 million, but then it turned out that Mr. Javis misinformed the bank about the real turnover of the startup: he said that his company provided educational loans to more than 4 million students, while in reality there were no more than 300 thousand.

In December last year, JP Morgan itself filed lawsuits against Charlie Javis and Frank development director Olivier Amara, and in January the Frank company was closed. However, Charlie Javis filed a counterclaim against the bank, accusing him of “spreading information that defames his reputation.” Now the OCC wants to check how the bank has handled the valuation of other startups bought by the bank in the last two years.

Evgeniy Khvostik