CHICAGO, Feb. 8, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeJPMorgan Chase & Co. (NYSE: JPM), Commerce Bancshares Inc. (Nasdaq: CBSH, Bank of America Corporation (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC) and Zions Bancorp. (Nasdaq: ZION).
The U.S. District Court of Southern Florida (Miami) has asked JPMorgan Chase & Co. (NYSE: JPM) to pay $110 million to settle a class lawsuit related to the charging of inappropriate overdraft fees to its customers. The court held the company responsible for manipulating transaction entries to generate larger overdraft fees, but this settlement has to be first approved by the U.S. District Judge in Miami.
The lawsuit filed by the customers stated that the transactions were re-sequenced by JPMorgan in such a way that the largest withdrawals were deducted first instead of being cleared in the order in which they were received. As a result, customers' balances diminished faster, resulting in a larger number of 'overdrawn' transactions, each of which then became chargeable.
With a rise in debit card usage, overdraft fees have become an important revenue driver for banks. Further, banks found it easier to generate revenues through overdraft fees by allowing customers to overdraw their accounts through debit purchases, ATMs, or any other electronic payment gateways. However, at times, customers were not even informed about such fee details, and they would come to know about it after already being charged.
Nevertheless, according to the new regulation passed in 2010, banks will not be able to charge such hefty fees without informing the account holders.
Hence, JPMorgan announced several changes to its overdraft fee structure. The company has stopped charging overdrafts without clients' permission, lowered the maximum number of fees per day to three from six and revised the order of charges to recognize debit-card transactions and ATM withdrawals as they occur.
Last year, Commerce Bancshares Inc. (Nasdaq: CBSH) and Bank of America Corporation (NYSE: BAC) were ordered to repay for their unfair overdraft practices. Commerce Bancshares paid $18.3 million while Bank of America was asked to pay a whopping $410 million to the customers to settle unfair overdraft fees charges.
Moreover in 2010, Wells Fargo & Co. (NYSE: WFC) was ordered to repay $203 million by the U.S. District Court of Northern California to recompense the customers who had sued the company for charging unfair overdraft fees.
Additionally, in October 2011, Zions Bank, a subsidiary ofZions Bancorp. (Nasdaq: ZION), was accused of charging improper overdraft fees under policies that were in place between 2005 and 2010.
Though the announcement of settling unfair overdraft fees will affect JPMorgan's financials, it will restore the confidence of the customers in the federal laws to some extent.
Currently, JPMorgan retains a Zacks #3 Rank, which translates into a short-term Hold rating.
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.