JPMorgan sued by investor over 'culture of lawlessness'

A pension fund has sued JPMorgan Chase & Co. and CEO James Dimon, accusing the bank of creating “a culture of lawlessness” that led to billions of dollars in settlements tied to mortgage-backed securities and Bernard Madoff's Ponzi scheme.
JUL 02, 2014
JPMorgan Chase & Co. (JPM) and directors including Chief Executive Officer Jamie Dimon were sued by an investor for creating “a culture of lawlessness” that led to billions of dollars in settlements tied to mortgage-backed securities and Bernard Madoff's Ponzi scheme. Under Mr. Dimon's leadership, the New York-based company sold low-quality residential mortgage-backed securities, failed to report questionable activity by Mr. Madoff, manipulated energy markets and engaged in fraudulent credit-card billing strategies, the Iron Workers Mid-South Pension Fund said in papers filed March 17 in Delaware Chancery Court and partly unsealed last week. (See who left JPMorgan recently.) Mr. Dimon, CEO since December 2005 and chairman since December 2006, “knowingly, recklessly, or with gross negligence created a culture of lawlessness” that resulted in fines, penalties settlements and related costs totaling at least $20 billion last year, the fund said. At the same time, Mr. Dimon received a 74% pay raise to $20 million. JPMorgan, the biggest U.S. lender by assets, agreed in November to a $13 billion settlement of government allegations that it misled investors and public when it sold bonds backed by faulty residential mortgages. U.S. and state officials blamed JPMorgan's actions for helping to cause the credit crisis that led to the worst recession since the Great Depression. MADOFF SETTLEMENT JPMorgan last month won court approval for a $543 million settlement with the trustee for Madoff's defunct firm over investors' claims that the bank turned a blind eye to the U.S. biggest Ponzi scheme. In addition, the bank agreed to pay $1.7 billion to the U.S. to resolve related criminal allegations and $350 million in a case brought by the Office of the Comptroller of the Currency. In July, the Federal Energy Regulatory Commission said the bank would pay $410 million to settle claims that it manipulated power markets to enrich itself at the expense of consumers in California and the Midwest from 2010 to 2012. The Iron Workers fund accuses JPMorgan officers and directors of corporate waste and unjust enrichment and asks a judge to award the company unspecified damages from them, order corporate governance improvements and greater shareholder input including the right to nominate at least three board members, separate the CEO and chairman's positions, and award legal fees. Brian Marchiony, a JPMorgan spokesman, didn't return an e-mailed message seeking comment on the lawsuit. The case is Iron Workers v. Dimon, CA9449, Delaware Chancery Court (Wilmington). (Bloomberg News)

Latest News

Farther debuts AI investment proposal tool for advisors to win clients
Farther debuts AI investment proposal tool for advisors to win clients

"Im glad to see that from a regulatory perspective, we're going to get the ability to show we're responsible [...] we'll have a little bit more freedom to innovate," Farther co-founder Brad Genser told InvestmentNews.

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

Are you optimally efficient?
Are you optimally efficient?

Taking a systematic approach to three key practice areas can help advisors gain confidence, get back time, and increase their opportunities.

Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida
Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida

Meanwhile, Osaic lures a high-net-worth advisor from Commonwealth in the Pacific Northwest.

Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B
Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B

The deals, which include its first stake in Ohio, push the national women-led firm up to $47 billion in assets.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.