JPMorgan Faces New Lawsuits Over Bets Gone ‘Horribly Wrong’
Published at | Updated at
Chris Hondros/Getty Images(NEW YORK) — JPMorgan Chase now faces two new lawsuits from shareholders angry over the bank’s two billion dollar trading loss. The suits, filed in federal court in New York, allege JPMorgan misled investors about the bet that went bad.
“Defendants misrepresented the losses and risk of loss to the Company arising from massive bets on derivative contracts,” plaintiff Saratoga Advantage Trust said in court papers. “These derivative bets went horribly wrong.”
Chief Executive Jamie Dimon has said the bank made “egregious” and “self-inflicted” mistakes, words that may come back to haunt him in court.
“We believe that he made false and misleading statements and omissions quite frankly,” Bruce Ventimiglia, CEO of Saratoga Advantage Trust, told ABC News.
The lawsuit names Dimon and Chief Financial Officer Douglas Braunstein.
Dimon and Braunstein knew, or could not reasonably have been unaware of, the magnitude of losses being incurred by JPMorgan,” court records said.
When JPMorgan disclosed the loss last week the bank said it resulted from a failed hedging strategy meant to insulate its portfolio from losses. Ventimiglia does not buy it.
“They have mislabeled what they were doing. They describe what they were doing as hedging strategies. We think they were outright bets,” he said.
JPMorgan Chase declined to comment on the lawsuits. The bank has also declined to give specifics about the trades, but Saratoga Advantage Trust believes “these wagers may have reached close to $100 billion dollars in size.”
“These types of derivatives trades are at the center of the 2008 financial crisis,” Ventimiglia said. “The proper disclosure of what these banks are doing is critical to investors.”
Copyright 2012 ABC News Radio