(Bloomberg News) JPMorgan Chase & Co. shareholders sued the bank and Chief Executive Officer Jamie Dimon in two separate cases over the company's $2 billion trading loss.
An Arizona trust filed a securities-fraud lawsuit in which it seeks to represent all investors who lost money on the stock as a result of alleged misstatements by the bank about its losses. In the second case, an individual investor asked for damages on behalf of the company from Dimon, the bank's board and other executives. Both suits were filed late yesterday in Manhattan federal court.
In the fraud suit, the trust seeks damages for investors who bought JPMorgan stock from April 13, when Dimon called concerns over the bank's trading risk "a complete tempest in a teapot," to May 10, when he disclosed the trading loss publicly.
"The trades in question, however, were anything but a tempest in a teapot, and quickly went from bad to worse," according to the complaint filed by Saratoga Advantage Trust -- Financial Services Portfolio, based in Goodyear, Arizona. "During the week following the April 13 conference call, losses from the trades ballooned to as much as $200 million per day."
In the action seeking damages on behalf of the company, called a shareholder derivative suit, the plaintiff claims JPMorgan executives and directors permitted a radical change in the bank's exposure to undisclosed investment risk.
Dimon Statement Cited
"The defendant Dimon went so far as to publicly and vigorously dispute that any investment safety regulation was necessary for financial institutions such as JPMorgan, because the company was purportedly so careful with its investments that no such regulations would be necessary," James Baker, a California resident, said in his complaint. "All of the individual defendants knew this was simply not the case."
Joseph Evangelisti, a JPMorgan spokesman, declined to comment on the lawsuits.
The shareholder fraud suit seeks unspecified damages on behalf of investors.
The derivative suit seeks unspecified damages from the officers and directors for the bank.
It also asks for a court order requiring that JPMorgan improve corporate governance by allowing its shareholders to vote on proposals to strengthen board supervision, to install two shareholder representatives on the board, to test internal audit and control policies and to ensure that management be immediately informed about unacceptable trading risks.
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