Stock fraud settlement to cost JP Morgan a whopping $150 million
JPMorgan Chase & Co has agreed to pay $150 million to resolve a securities fraud lawsuit by investors suing the bank over its “London Whale” trading scandal, which caused a $6.2 billion loss.
New York: JPMorgan Chase & Co has agreed to pay $150 million to resolve a securities fraud lawsuit by investors suing the bank over its “London Whale” trading scandal, which caused a $6.2 billion loss.
The settlement was disclosed in papers filed on Friday in federal court in Manhattan and would resolve a class action lawsuit filed in the wake of the scandal that emerged in 2012.
The lawsuit stemmed from oversight by JPMorgan’s chief investment office of a synthetic credit portfolio that caused the $6.2 billion loss to investors and was linked to traders in the bank’s London office including Bruno Iksil, the so-called London Whale.
Shareholders accused JPMorgan of knowingly hiding increased risks at the chief investment office, including on an April 13, 2012, conference call when JPMorgan Chase & Co chief executive officer Jamie Dimon called reports about the synthetic portfolio a “tempest in a teapot.”
The settlement covers anyone who bought JPMorgan stock from April 13 to May 21, 2012, a time when JPMorgan’s share price fell by roughly one-quarter and wiped out more than $40 billion of market value.
The lawsuit was spearheaded by pension funds in the US states of Arkansas, Ohio and Oregon and in Sweden. Ohio attorney general Mike DeWine in a statement on Monday said the deal would help the state’s Ohio Public Employees Retirement System recover its losses and discourage future fraud.
“Misleading investors with wrong or incomplete information is unacceptable and causes real damage,” Mr DeWine said. A spokeswoman for JPMorgan did not immediately respond to a request for comment.
The US banking major JPMorgan paid more than $1 billion and admitted wrongdoing to settle US and British probes into London Whale losses. Former traders Javier Martin-Artajo and Julien Grout have been criminally charged in the United States with hiding losses linked to Iksil, who has been cooperating with prosecutors.