In yet another resolution of a legal headwind, JPMorgan Chase & Co. JPM has settled a class-action lawsuit, stemming from the ‘London Whale’ scandal, for $150 million. The case, filed in the U.S. District Court for the Southern District of New York, was led by public pension funds in the U.S. states of Arkansas, Ohio and Oregon and in Sweden.
Further, the shareholders who purchased JPMorgan stock between Apr 13, 2012, and May 21, 2012, were part of the settlement too, as the stock plunged roughly 25% following the revelation of the ‘London Whale’ scandal. Notably, the company did not admit to any wrongdoing.
While announcing the agreement with JPMorgan, Ohio Attorney General Mike DeWine said, “Misleading investors with wrong or incomplete information is unacceptable and causes real damage. Ohio's pension funds, like all investors, expect companies to provide accurate information so they can appropriately judge the risk of an investment. I am pleased that Ohio has reached this settlement to help recover investment losses for our OPERS pension system members and also discourage future fraud.”
The lawsuit alleged that JPMorgan issued false and deceptive statements pertaining to its trading activities. The company CEO, Jamie Dimon, had dismissed concerns over CIO as “a tempest in a teapot” during first-quarter 2012 conference call.
However, in less than a month, JPMorgan disclosed losses of more than $2 billion owing to “egregious” trading activity. Following this, the company’s shares dropped, leading to huge losses for pension funds and investors.
JPMorgan has already paid more than $1 billion and acknowledged wrongdoings while settling the U.S. and British probes pertaining to the ‘London Whale’ losses.
We believe the latest settlement puts to rest a major debacle that significantly impacted JPMorgan’s financials. Of late, the company has been moving past the shadow of its business malpractices and focusing on ways to improve profitability.
Currently, JPMorgan carries a Zacks Rank #3 (Hold). Better-ranked banks include The PNC Financial Services Group, Inc. PNC, Central Pacific Financial Corp. CPF and Fidelity Southern Corporation LION. All these stocks hold a Zacks Rank #2 (Buy).
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