The dramatic downfall of WeWork Chief Executive Adam Neumann is casting a harsh spotlight on JPMorgan CEO Jamie Dimon. Critics now claim Dimon’s bank appears to have gone too far in wooing the fast-growing startup, including the way it pumped up Neumann with personal loans that led to spending that came back to haunt WeWork. On Tuesday, Neumann, 40, stepped down as CEO of WeWork’s parent company, We Co., amid criticisms of his spending, often at WeWork’s expense. JPMorgan, along with UBS and Credit Suisse, helped Neumann with a $500 million personal line of credit that allowed him to buy buildings that he then leased back to WeWork — drawing backlash when the dealings came to light ahead of the now-defunct IPO. That same credit line also allowed Neumann to cash out a big chunk of his shares, which also angered many investors, according to reports. In total, JPMorgan provided Neumann with $97.5 million in loans, according to filings. And Dimon was known to have dealt with Neumann on a one-to-one basis, sources said. JPMorgan later became We Co.’s lead IPO underwriter, a deal that should have resulted in $100 million in fees. But demand for the shares fell short of expectations, in part due to questions about Neumann’s self-dealing. The IPO was called off and Neumann was out a week later. “This situation makes JPMorgan look like a cheap outfit,” said Richard Painter, the former chief White House ethics lawyer under George W. Bush. Painter believes WeWork is a good example of why commercial banks, which make loans, should not be underwriters — which was the case until 1999, when the Glass-Steagall Act was repealed. JPMorgan declined to comment.
Adam Neumann’s downfall has cast the spotlight on Jamie Dimon, the CEO of JPMorgan, with critics claiming the bank was too aggressive in its efforts to woo the fast-growing start-up. JPMorgan, UBS and Credit Suisse extended a $500m personal line of credit to the former WeWork CEO that facilitated the now controversial deals to buy properties that were then leased to WeWork. The same arrangement also allowed Neumann to sell a significant number of shares in the company, another point of contention for investors. The bank went on to become lead underwriter for the start-up’s IPO, which should have resulted in fees of $100m.