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Security Interest Error Leaves JPMorgan Chase Vulnerable to Class-Action
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JPMorgan Chase

Summary: Members of the term loan given to General Motors by JPMorgan Chase Bank are suing for gross negligence and breach of contract after an error was discovered in the original documents.

A lawsuit has been filed against JPMorgan Chase & Co and their lawyers at Simpson Thacher & Bartlett LLP over the security interest on the $1.5 billion term loan the bank gave to General Motors Corp. A contributor in the loan is suing since the mistake should have been caught by JPMorgan and Simpson Thacher.

  
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The mistake in the recording of the security interest by an associate at Mayer Brown has made it possible for the now bankrupt carmaker to escape paying the loan back. Without that security interest, General Motors would not have to pay the full loan back.

The Employees’ Retirement System of the City of Montgomery, Alabama filed the class action in Manhattan’s federal court. They say they represent 400 members of the term loan. They are claiming the bank didn’t notify them of the error as a way to avoid running into the statute of limitations. They say they only became aware of the mistake in May. They were hit with a lawsuit to recover payments made on the loan.

The lawsuit claims the bank has breached the contract and is grossly negligence whereas Simpson Thacher committed malpractice. The lawsuit will be Employees’ Retirement System of the City of Montgomery v. JPMorgan Chase Bank NA, 15-6002, U.S. District Court, Southern District of New York (Manhattan).

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Source: http://www.bloomberg.com/news/articles/2015-08-03/jpmorgan-simpson-sued-over-mistake-in-gm-loan-business-of-law

Photo: truthinmedia.com





 

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