NEW YORK (Reuters) - JPMorgan Chase & Co and former Bear Stearns Cos managers Ralph Cioffi and Matthew Tannin have won the dismissal of a lawsuit in which Bank of America Corp accused them of lying in an attempt to prop up two failing hedge funds.
U.S. District Judge Alison Nathan in Manhattan rejected Bank of America’s fraud and breach of fiduciary claims, and said the bank was unable to prove whether any damages could be traced to the concealing of information that proved to be market-moving.
In its October 2008 lawsuit, Bank of America claimed to have suffered “significant losses” because Bear concealed that Cioffi’s and Tannin’s funds were facing substantial withdrawal demands in the spring of 2007 and at risk of imminent collapse.
Bank of America claimed to have lost money on a $4 billion securitization it created at Bear’s request, and on nearly $1 billion of financing that the hedge funds raised from the bank because they were “desperate to secure liquidity.”
Former Bear Stearns Asset Management director and co-defendant Raymond McGarrigal also won dismissal of the lawsuit.
A JPMorgan spokesman did not immediately respond to a request for comment. Spokesmen for Bank of America did not immediately respond to requests for comment. The banks are the largest in the United States by assets.
JPMorgan bought Bear in 2008. The following year, a federal jury in Brooklyn, New York, acquitted Cioffi and Tannin of criminal fraud charges over their handling of the hedge funds.
The case is Bank of America NA et al v. Bear Stearns Asset Management Inc et al, U.S. District Court, Southern District of New York, No. 08-09265.
Reporting by Jonathan Stempel in New York; Editing by Bob Burgdorfer