Regular readers know that if JP Morgan had been required to provide ultra transparency and disclose on an ongoing basis its current global asset, liability and off-balance sheet exposure details the public pensions would have had access to the information they needed to independently and accurately assess the situation.
As a result, with ultra transparency there would be no basis for the lawsuit (as an aside, the trade probably wouldn't have occurred if there was ultra transparency because the market would have exerted discipline on JP Morgan to restrain its risk taking).
Public pension funds from Arkansas, Ohio, Oregon and Sweden will be lead plaintiffs in a group lawsuit against JPMorgan Chase & Co. (JPM)over trades made by Bruno Iksil, known as the “London Whale.”
U.S. District Judge George Daniels in Manhattan ruled today that lawsuits against the New York-based bank should be consolidated into a class action. The pension funds allege they lost as much as $52 million because of fraudulent activities by JPMorgan’s London chief investment office....
“The public pension funds, a group which includes some of the largest public pension funds in the world, have far and away the ‘largest financial interest’ in the relief sought by the class in these cases,” Gerald Silk, a lawyer with Bernstein Litowitz Berger & Grossmann LLP, said Aug. 9 in court papers.
JPMorgan Chief Executive Officer Jamie Dimon said in July the firm’s chief investment office had $5.8 billion in losses on the trades so far, and the figure may climb by $1.7 billion in a worst-case scenario. Iksil amassed positions in credit derivatives so big and market-moving he became known as the London Whale.
The pension funds allege they sustained losses after being given false information that hid the nature of the bank’s trades.