JPMorgan says London Whale didn't cause Lehman bankruptcy

Thu Feb 28, 2013 3:53pm EST
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By Jonathan Stempel

NEW YORK (Reuters) - The former JPMorgan Chase & Co (JPM.N: Quote) trader known as the "London Whale" was not responsible for Lehman Brothers Holdings Inc's bankruptcy and should not be dragged into an $8.6 billion lawsuit accusing the largest U.S. bank of causing it, JPMorgan said.

According to a Wednesday filing in Manhattan bankruptcy court, JPMorgan believes that Lehman's own documentation showed that the trader, Bruno Iksil, had nothing to do with alleged mismarked derivative trades that are part of the dispute.

JPMorgan said Lehman and its unsecured creditors committee, which also seeks Iksil's testimony, pointed to nothing that shows the bank's Chief Investment Office had any role in collateral requests at the center of Lehman's lawsuit.

Getting Iksil involved now would waste time and money, JPMorgan said, particularly in light of statements by former U.S. Treasury Secretaries Timothy Geithner and Henry Paulson that the collateral requests did not cause Lehman to fail.

"It is readily apparent that the only real reason for plaintiffs interest in taking Mr. Iksil's deposition is that he has been in the news," JPMorgan said.

Andy Rossman, a partner at Quinn Emanuel Urquhart & Sullivan representing Lehman, in a statement on Thursday said Iksil's mismarked trades "resulted in improper demands for hundreds of millions of dollars of collateral. JPMorgan's extraordinary effort to block that testimony is revealing."

A hearing on Lehman's request is scheduled for March 13.

Iksil gained notoriety after his activities were linked to $6.2 billion of trading losses at JPMorgan's Chief Investment Office. The French national had worked in London for the New York-based bank.   Continued...

The Lehman Brothers booth on the trading floor of the New York Stock Exchange, is shown in this September 16, 2008 file photo. REUTERS/Brendan McDermid/Files