JPMorgan Chase & Co. will pay $150 million to settle fraud allegations tied to its “London Whale” trading debacle, after U.S. District Judge George B. Daniels gave final approval to the class action settlement last month. Judge Daniels found that the settlement was “fair, reasonable and adequate” for the class of investors, saying the two objections had no merit. The settlement was placed into escrow in January and has been accruing interest since then. It was reported that an expert for the investors had estimated a maximum recovery at trial of about $2 billion.
Apparently there was a risk that the Plaintiffs could establish that bank CEO Jamie Dimon and former finance chief Douglas Braunstein knew that they were making misleading statements during an April 2012 conference call. Dimon and Braunstein have maintained that they believed their statements to have been true when they were made, but the investors have argued the opposite. None of the institutional investors, which held about 76 percent of the stock during the class period, objected to the settlement. Anyone who bought JPMorgan common shares between April 13 and May 21, 2012, will be part of the settling class.
The suit was filed in 2012, and in 2014, during motions to dismiss, Judge Daniels reduced the scope of the case by dismissing three individual defendants and limiting the investors’ claims to statements made by Dimon and Braunstein during the conference call. During that call, Dimon, addressing reports of the losses, called the matter “a complete tempest in a teapot.”
Other “London Whale” civil suits – which use the name given to Bruno Iksil, the former JPMorgan trader whose bets caused the losses – have been dismissed, including employee pension and derivative claims against the bank. The bank itself settled with U.S. and United Kingdom regulators in 2013.
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