JPMorgan ordered to face London Whale class action in U.S
By Jonathan Stempel
NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N: Quote) shareholders on Tuesday won court permission to pursue their securities fraud lawsuit against the bank over the "London Whale" trading scandal, which caused a $6.2 billion loss, as a class action.
U.S. District Judge George Daniels in Manhattan rejected the largest U.S. bank's arguments against class action certification, which often results in higher recoveries because plaintiffs can sue as a group rather than individually.
JPMorgan, Chief Executive Officer Jamie Dimon and former Chief Financial Officer Douglas Braunstein had said shareholders would be unable to show they relied on alleged misstatements about the bank's risk management, or prove damages on a classwide basis.
Brian Marchiony, a bank spokesman, declined to comment.
The lawsuit stemmed from oversight by JPMorgan's Chief Investment Office of a synthetic credit portfolio that caused the $6.2 billion loss and was linked to traders in the bank's London office including Bruno Iksil, the so-called London Whale.
Shareholders led by pension funds in Arkansas, Ohio and Oregon alleged that JPMorgan, Dimon and Braunstein knowingly hid increased risks at the Chief Investment Office, including on an April 13, 2012 conference call when Dimon called reports about the synthetic portfolio a "tempest in a teapot."
The class period runs from April 13 to May 21, 2012, a period when JPMorgan's share price fell by roughly one-quarter, wiping out more than $40 billion of market value.
JPMorgan paid more than $1 billion and admitted wrongdoing Continued...