Boston, MA 04/01/2014 (wallstreetpr) – It seems that JP Morgan Chase & Co. (NYSE:JPM) has to face a lawsuit from its shareholders who have accused it of securities fraud. This apparently happened when the company lost $6.2 billion due to the “London Whale” scandal. It is said the company mislead its shareholders during this time, regarding its ability to manage risks that might have arisen over the issue.
George Daniels, US District Judge in Manhattan said that the company’s shareholders could pursue such an accusation. The accusation is primarily aimed at Chief Executive Jamie Dimon and former Chief Financial Officer Douglas Braunstein. It is believed that the two covered up the increased risks the bank was taking since early 2012.
Daniels said that statements made right after media revelation about the scandal and that they were made trying to reassure investors that the trades in question were under control. The claimants have also mentioned that Dimon and Braunstein knew and also had access to information regarding those trades and that their statements made in public were inaccurate.
Besides, the judge dismissed cases against Iana Drew, then leader of the Chief Investment Office, Mike Cavanagh who was CFO before Braunstein and Barry Zubrow, who help the post of Chief Risk Officer.
In another decision taken by the judge on Monday, a lawsuit that was aimed at JP Morgan’s directors and also by the bank’s employees over losses due to investing in the bank’s stock in retirement accounts has been dismissed.
“London Whale” scandal
Bruno Iksil, a French national who worked in a bank office in London is the primary accused in the scandal. The $6.2 billion loss had been linked trades that were made by him.
Last year, the bank paid more than $1 billion in order to settle probes by the U.S. and Britain, pertaining to the “London Whale” losses. JP Morgan also admitted to wrongdoing in that specific case.
Javier Martin Artajo and Julien Grout, who were then traders at the bank, were indicted in September last year. These two had tried to hide losses linked to Bruno Iksil. They are also fighting charges, at present.