JPMorgan Chase's Colorful Lawsuits

Sun, 08/12/2012 - 10:49|
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Jamie Dimon probably wishes he were more like Jay-Z: It must be nice to have only 99 problems.

His bank, JPMorgan Chase, the biggest bank in the U.S., unveiled a long list of lawsuits and regulatory probes in a filing with the Securities and Exchange Commission on Thursday. One of the most noteworthy was the fusillade of subpoenas and lawsuits hitting the bank from around the world as part of its alleged involvement in the manipulation of Libor, a key lending rate.

But Libor is far from the bank's only problem: It is being sued and investigated for everything from its $5.8 billion loss on crazy credit derivatives bets to its alleged manipulation of electricity markets.

"The lawsuits and investigations in which JPMorgan is ensnarled consume eight pages of the firm’s quarterly filing (10Q) and more than 9,000 words," Pam Martens of Wall Street On Parade calculated. "Anyone reading the details would be right to question if JPMorgan is a bank or a mega legal defense fund."

The bank has spent $3 billion on litigation so far this year, she notes, or more than half its London Whale loss.

Without further ado, here's a list of some of the pickles JPMorgan has gotten itself into. This isn't even the full list -- just the more colorful ones.

London Whale
The bank's chief investment office gambled on credit derivatives, losing $5.8 billion (so far), and its trading desk may have tried to hide the losses from the home office. The bank says it is being sued by shareholders over the losses and has gotten subpoenas and requests for information from "Congress, the OCC, Federal Reserve, DOJ, SEC, CFTC, UK Financial Services Authority, the State of Massachusetts and other government agencies, including in Japan, Singapore and Germany."
Milan Swap Deal
The bank has faced lawsuits and criminal investigations over an interest-rate swap deal it made with the city of Milan, Italy, back in 2005. The bank settled a civil suit, but criminal charges are still pending against the bank and several employees, with hearings in the trial "occurring on a weekly basis since May 2010."
Enron
The bank and some of its executives are still being sued over the bank's relationship with the failed, fraud-ridden energy giant, more than a decade after its failure.
Energy Manipulation
Speaking of Enron, the Federal Energy Regulatory Commission is investigating charges that JPMorgan manipulated power markets in California and the Midwest.
Credit Card Swipe Fees
The bank said in the filing that it will pay about $1.2 billion to settle charges that it conspired with MasterCard and Visa to rig credit-card swipe fees.
Libor
The bank is being investigated by regulators all over the world for its alleged involvement in manipulating Libor, a short-term interest rate that affects borrowing costs for people, businesses and governments all over the world.
Madoff Ponzi Scheme
Several lawsuits have accused the bank of aiding and abetting Bernie Madoff's Ponzi scheme, the biggest in history. The Madoff bankruptcy trustee and others have also sued the bank to get back some Madoff clients' money.
MF Global
The bank is under investigation by regulators for its relationship with the failed brokerage firm MF Global. It is also being sued for allegedly aiding and abetting MF Global misuse of customer money.
Mortgage Backed Securities
The bank is being sued by hordes of investors for its bundling and selling of mortgage-backed securities packed with bad mortgage debt before the financial crisis. "There are currently pending and tolled investor claims involving approximately $130 billion of such securities," the bank says.
Mortgage Foreclosures
The bank was part of the big $25 billion settlement with the government over mortgage-foreclosure abuses. But there are still several lawsuits and regulatory actions pending against the bank over its foreclosure practices.
Peregrine Financial
The bank didn't mention this in its regulatory filing, but it is also involved in the failure of the Iowa brokerage firm Peregrine Financial. JPMorgan holds some customer money for the firm, and recently tussled in court with the PFG bankruptcy trustee.

 

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