(March 21, 2012) – A lawsuit headed by three American union pension funds against JP Morgan (JPMC)—brought over securities lending losses—has been settled for $150 million.
The AFTRA Retirement Fund, the Imperial County Employees’ Retirement System, and the Investment Committee of the Manhattan and Bronx Surface Transit Operating System had been named the lead plaintiffs for the class. According to court documents, the suit related to “investment of certain ‘securities lending’ clients’ cash collateral in the June 2009 Medium-Term Notes of Sigma Finance, Inc., a structured investment vehicle that collapsed on September 30, 2008.”
“[T]he evidence of record . . . establishes that (JPMC) predicted Sigma’s collapse,” the suit contended. The firm also allegedly “engaged in predatory repo with substantial haircuts to ‘cherry-pick’ the best assets in Sigma’s portfolio for itself, immediately depleted the quantity and quality of Sigma’s assets by taking title to assets in an amount that exceeded the financing it provided by nearly a billion dollars; and ultimately reaped nearly $2 billion of profits for itself while leaving the Class’ notes virtually worthless.”
While a settlement of the suit was announced in February, the amount of $150 million was released in court documents obtained by Bloomberg.
The case is Board of Trustees of the AFTRA Retirement Fund v. JPMorgan Chase Bank NA, 09-cv-686, U.S. District Court, Southern District of New York (Manhattan).