$150 million securities lending lawsuit for J.P. Morgan
22 March 2012 New York
Image: Shutterstock
J.P. Morgan will pay $150 million to settle a lawsuit by three American union pension funds and other investors accusing the bank of securities lending losses.
The settlement with investors including the American Federation of Television and Radio Artists (AFTRA) Retirement Fund related to the collapse of $27 billion investment fund Sigma Finance Corp, which was created by London-based Gordian Knot Ltd. and failed in the 2008 financial crisis.
According to the complaint, J.P. Morgan ‘buried its head in the sand and refused to heed the warning signs’ by investing cash collateral posted by participants in a securities lending programme after analysts predicted Sigma would be unable to repay the notes.
Sigma's failure left about $1.9 billion as security for roughly $6.2 billion of medium-term notes and other secured debt, the filings said.
J.P. Morgan spokeswoman Kristen Chambers said the New York-based bank did not admit wrongdoing in settling, adding: "We are confident that we acted prudently and appropriately."
Other plaintiffs in the case are the Manhattan and Bronx Surface Transit Operating Authority Pension Fund in New York City, and the Imperial County Employees' Retirement System in El Centro, California. BNY Mellon and Wells Fargo & Co are among other banks to be sued for investing client money with Sigma.
The settlement with investors including the American Federation of Television and Radio Artists (AFTRA) Retirement Fund related to the collapse of $27 billion investment fund Sigma Finance Corp, which was created by London-based Gordian Knot Ltd. and failed in the 2008 financial crisis.
According to the complaint, J.P. Morgan ‘buried its head in the sand and refused to heed the warning signs’ by investing cash collateral posted by participants in a securities lending programme after analysts predicted Sigma would be unable to repay the notes.
Sigma's failure left about $1.9 billion as security for roughly $6.2 billion of medium-term notes and other secured debt, the filings said.
J.P. Morgan spokeswoman Kristen Chambers said the New York-based bank did not admit wrongdoing in settling, adding: "We are confident that we acted prudently and appropriately."
Other plaintiffs in the case are the Manhattan and Bronx Surface Transit Operating Authority Pension Fund in New York City, and the Imperial County Employees' Retirement System in El Centro, California. BNY Mellon and Wells Fargo & Co are among other banks to be sued for investing client money with Sigma.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
