After a report concerning questionable executive compensation payouts an investigation on behalf of current long term investors in JPMorgan Chase & Co. (NYSE:JPM) over potential breaches of fiduciary duty related to the historical and potential compensation that was awarded certain senior officers and executives of JPMorgan Chase & Co. was announced.

Kenneth R. Feinberg, the Obama administrations special master for executive compensation, reviewed over the past five months compensations paid to the 25 highest earners of 419 banks between October 2008, when the first US Troubled Asset Relief Program funds were dispensed, and February 2009, when the stimulus bill took effect. Kenneth Feinberg said he immediately excluded most of the 419 companies from his examination because they said they didn't pay any executives more than $500,000, but he wound up citing 17 banks for making troublesome payments. 11 of the 17 banks making troublesome payments have already repaid the government for money they borrowed under TARP.

Mr. Feinberg determined that banks paid out $1.6 billion in unwarranted bonuses, retention awards, stock grants and 'golden parachute' retirement packages to their top earners at the height of the financial crisis.

JPMorgan Chase & Co., the financial holding company located in New York, is among the 17 companies. Another of the other 16 companies was Citigroup, which was reportedly identified for having the most egregious compensation packages, according to government officials with knowledge of Mr. Feinbergs report. Citigroup reportedly handed out several hundred million dollars in pay in 2008 as it neared collapse. Nearly two-thirds of the payouts amount to Andrew J. Hall, owner of a nearly 1000 year old German Medieval Castle, who reportedly received a payout of more than $100 million in connection with spin-off of Citigroups Phibro energy trading unit for $370 million to Occidental Petroleum in 2009.

In most cases the banks told Feinberg that they were obligated by employment contracts to pay the bonuses and other compensation, but Kenneth R. Feinberg said to reporters that those 17 companies exercised 'poor judgment' for making the $1.6 billion in 'ill-advised payments' to their top paid employees shortly after accepting TARP funds from the federal government. 'They shouldn't have made these payments,'' Feinberg told reporters. 'They were ill-advised. They were troublesome.'

According to the investigation by a law firm the investigation on behalf of current long term investors in the JPMorgan Chase & Co. (NYSE:JPM) stock focuses, among other things, on possible shareholder claims that certain of JPMorgan Chase & Co. senior officers were unjustly enriched through their receipt of unwarranted, excessive or unearned compensation in past years. Certain senior officers and executives at JPMorgan Chase & Co were awarded salaries, bonuses, stock options and other forms of long-term, incentive or retirement compensation that were, so the investigation, excessive or unwarranted based on the JPMorgan Chase & Co. performance.

James Dimon, chief executive officer of JPMorgan Chase & Co., received in 2007 a salary of $1 million plus $14.5 million bonus and $13 million in stock awards or $109.96million in 5year total compensation, while JPMorgan received $25billion in TARP Funding.

The investigation by the law firm focuses on claims that the prior compensation awarded at the JPMorgan Chase & Co. (NYSE:JPM) is now clearly improper based upon its current operating condition.

JPMorgan Chase & Co., which reported in 2007 Net Income of $15.365billion, lost in 2008 2/3 of its Net Income and could only report a decreased Net Income of $5.605billion. Even though JPMorgan Chase & Co. was able to increase its Net Income in 2009 to $11.652billion over its Net Income in 2008, it wasnt able to reach its 2007 Net Income. JPMorgan Chase & Co. Net Income of 2009 is still about 25% lower than its 2007 Net Income. Shares of JPMorgan Chase & Co. (JPM) traded in 2007 as high as $52.54 per share, but lost in 2008 more than 50% of its value to$22.72 per share. JPM stock traded as low as $15.93 per share in 2009, lower than its low in 2002 and as low as in 1995. Recently JPM shares were able to recover from its 2009 low and traded at $39.88 per share. J.P. Morgan Chase & Co. was already involved in several other lawsuits. For instance, on April 10, 2009, investors filed a lawsuit in in the U.S. District Court for the Southern District of New York on behalf of investors who acquired Mortgage Pass-Through Certificates of J.P. Morgan Acceptance Corporation I pursuant and/or traceable to an alleged false and misleading Registration Statement filed on March 27, 2007, along with an alleged false and misleading Prospectus Supplements filed during February through April, 2007, each of which were expressly incorporated by reference into the Registration Statement. Another lawsuit was filed on July 10, 2009, against J.P. Morgan Chase & Co. in the U.S. District Court for the Southern District of New York on behalf of investors, who purchased between July 10, 2004 and February 13, 2008, certain auction rate securities for which J.P. Morgan Securities Inc. served as sole auction dealer, lead auction dealer, co-lead auction dealer, or joint lead auction dealer. The investors allege violations of the Sections 10(b) and 20(a) of the Securities Exchange Act of 1934

Finally and most importantly the investigation focuses also on possible claims that would allow JPMorgan Chase & Co. (NYSE:JPM) stockholders to influence or control future compensation decisions at JPMorgan Chase & Co.

Within the industry huge amounts have been allocated for payout and bonus. Goldman Sachs is reportedly paying out an average of $544,000 per worker, though many could earn several times that amount, JP Morgan Chase on average pays about $400,000, and Morgan Stanley pays about $262,000. Morgan Stanley reportedly put aside $8.3 billion for pay and benefits during the first half of 2010, 44% more than during the same period last year. Goldman Sachs put aside $3.8 billion for pay and benefits in the second quarter equivalent to 43% of total quarterly revenue in addition to $5.5 billion in the first three months.