J.P. Morgan settles lawsuit on alleged fiduciary breach in stable value funds

The $75M agreement ends a years-long class-action trial

Nov 8, 2017 @ 2:18 pm

By Rob Kozlowski

An ERISA class-action lawsuit against J.P. Morgan Chase alleging a breach of fiduciary duty in its stable value fund by a class of participants has been settled for $75 million, a court document announcing the agreed settlement shows.

The settlement by plaintiffs in the U.S. District Court for the Southern District of New York would bring to an end a years-long class-action lawsuit in which participants alleged improper investments by J.P. Morgan's stable value fund between Jan. 1, 2009 and Dec. 31, 2010. The lawsuit said the stable value fund improperly invested in two commingled J.P. Morgan funds, the intermediate bond fund and the intermediate public bond fund, which the settlement document said "allegedly invested in excessively risky, highly leveraged assets, including, among other things, mortgage-related assets."

The original lawsuit was filed in the U.S. District Court for the Southern District of New York in 2012, followed by a consolidation with two other similar lawsuits in December 2014.

Kristen Chambers, J.P. Morgan spokeswoman, said in an email that the proposed settlement is pending court approval. "This settlement is related to cases filed several years ago and events that date back to the financial crisis," she said. "Any settlement will be to avoid the ongoing costs of litigation, not a finding of wrongdoing or liability."

She also added "no investor has ever experienced a negative return or lost money in any JPM stable value products. Our stable value products have consistently met all of their stated objectives, including outperforming money market investment funds."

Michael M. Mulder, partner at The Law Offices of Michael M. Mulder, an attorney for the plaintiffs, said: "We are pleased to have the case resolved with the settlement and it benefits many 401(k) participant investors."

Rob Kozlowski is a reporter at InvestmentNews' sister publication Pensions & Investments.

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