Boston, MA, 04/02/2014 (usastockreports) – JPMorgan Chase & Co. (NYSE:JPM) could be facing a heavy lawsuit from its shareholders after being charged with providing misleading information of the bank’s ability to manage risk arising out of the London Whale scandal, where the bank lost USD 6.2 billion.
Justice George Daniels, Manhattan District Judge ruled that shareholders could pursue their claims against JPMorgan, its CEO, Jamie Dimon and former CFO Douglas Braunsteinfor misleading investors about risks being taken by bank’s Chief Investment Officer in early 2012.
The USD 6.2 billion loss was linked to trades done under the guidance of French trader Bruno Iksil, who worked in the bank’s office in London. These lawsuits are in addition to the USD 1 billion paid to settle U.S. and British regulatory probes.
Justice Daniels allowed shareholders to pursue claims that the bank frequently understated the value at riskmetric, including understating the same in a2012 earnings call where issues related to synthetic credit portfolio managed by MrIksil as were termed as “tempest in a teapot”.
The judge ruled that the plaintiffs have adequately alleged that senior executives including the CEO Mr.Dimon and CFO Mr. Braunstein knew fact and/or had access to information suggesting that their public statements were inaccurate, he added.
However in a separate decision, which could bring in some relief, Justice Daniels dismissed other lawsuits by bankemployees over losses incurred from investing in the company’s shares as part of their retirement account related investment.
The Judge also discharged claims against other JPMorgan officials: Ina Drew, who controlled the CIO; Mike Cavanagh, CFO preceding Braunstein; and Barry Zubrow, who was JP Morgan’s chief risk officer.
In a related development, Jacob Zamansky the lawyer representing the employees , was quoted as planning for appeal to a higher court as one of the possible course of action as a reaction to Justice Daniel’s verdict. In all probability they would respond after The U.S. Supreme Court ruling due on Wednesday in acase against Fifth Third Bancorp.