Legal News

JPMorgan to Face Lawsuit over Its Investments in Lehman
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

On Wednesday, U.S. District Judge Katherine Forrest in Manhattan refused JPMorgan’s motion to dismiss a lawsuit brought in 2009 by the Operating Engineers Pension Trust of Pasadena, California. The pension trust accused JPMorgan of mismanaging the trust’s money by investing in Lehman Brothers Holdings Inc notes, before Lehman Brothers filed for bankruptcy.

U.S. District Judge Barbara Jones had dismissed an early version of the lawsuit last year, but the pension fund had been allowed to file a revised complaint. Jones had held that JPMorgan had met the “prudent man” standard and the pension fund had failed to show that JPMorgan had acted in any manner other than ordinary investment managers would have.

According to court documents, the pension plan had made a securities lending agreement with JPMorgan in 2005. Under the agreement, the pension plan loaned securities to the bank, which then loaned the securities to borrowers against cash collateral managed by JPMorgan.

  
What
Where


However, the lawsuit alleges, instead of managing the cash collaterals conservatively, JPMorgan invested the cash collateral in an entity which was supported by senior unsecured floating rate Lehman notes. This entity refused to sell Lehman’s senior notes, even when it became apparent that Lehman was in deep trouble, thus leading to a loss of about 85 percent of the value of the notes.

While denying JPMorgan’s motion to dismiss the suit, the federal judge observed, “The documents in the (lawsuit) cannot – at this stage of the case – dispatch plaintiff’s claims to the waste bin.”

The lawsuit also accuses JPMorgan of making the risky investments with the intention of backing Lehman at the expense of the money of the pension trust, while JPMorgan played down its direct support of Lehman.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!




The lawsuit, The Board of Trustees of the Operating Engineers Pension Trust v. JPMorgan Chase Bank, National Association, U.S. District Court, Southern District of New York, No. 09-09333, seeks class action status on behalf of others similarly affected by the same JPMorgan securities lending program.





 

RELEVANT JOBS

Paralegal / Legal Assistant

USA-NY-Staten Island

STATEN ISLAND PLAINTIFFS PERSONAL INJURY LAW FIRM IS SEEKING A FULL TIME/PART TIME PARALEGAL/LE...

Apply now

Attorney

USA-WA-Walla Walla

When the COVID crisis hit our state, we continued serving clients in our community. We are...

Apply now

Associate Attorney

USA-FL-Orlando

A/V Rated Downtown Orlando Law firm of Fisher Rushmer, P.A. is seeking an associate with 2 - 6 years...

Apply now

Legal Extern / Litigation Law Clerk

USA-VA-Alexandria

Old Towne Associates, P.C. (Alexandria, VA) Legal Extern Openings - Class of 2021 and 2022 ...

Apply now

BCG FEATURED JOB

Locations:

Keyword:



Search Now

Mergers and Acquisitions Associate Attorney

USA-CA-San Diego

San Diego office of a BCG Attorney Search top ranked law firm seeks Mergers and Acquisitions Associa...

Apply Now

Senior Wealth Management Group Associate Attorney

USA-CA-San Diego

San Diego office of our client seeks Senior Wealth Management Group Associate Attorney with 9 years ...

Apply Now

Bankruptcy Associate Attorney

USA-CA-Los Angeles

Los Angeles office of a BCG Attorney Search top ranked law firm seeks Bankruptcy Associate Attorney ...

Apply Now

Most Popular

SEARCH IN ARCHIVE

To Top