First Class Action Lawsuit Over CIO Losses Filed Against JP Morgan

That didn’t take long.
Less than 48 business hours after Jamie Dimon held a conference call to inform investors that Bruno and Achilles had already cost the firm $2 Billion in a bad derivatives ‘hedge’, the first class action suit by JP Morgan shareholders has been filed in US District Court for the Southern District of NY.

The investors claim that the Defendants issued materially false and misleading statements regarding certain securities trading by the Company’s Chief Investment Office (“CIO”).
Specifically, the plaintiff claims that defendants allegedly misrepresented and/or failed to disclose that the CIO had engaged in extremely risky and speculative trades that exposed JPMorgan to significant losses.

While this is obviously a big new blow for The Morgue (though not unexpected), what kind of fool needs to have it disclosed to him that a CIO office trading $70 trillion in IR swaps is engaging in risky, speculative trades that could expose JPM to significant losses!?!   This is like suing the Fed because they failed to disclose the fact that Quantitative Easing was debasing your dollars.

Of course an office engaging in unregulated bets totaling 2,000 times the market cap of the entire firm is engaging in risk trading practices!
An investor in NYSE:JPM shares filed a lawsuit in the U.S. District Court for the Southern District of New York over alleged Violations of Federal Securities Laws by certain financial statements made by JPMorgan Chase & Co. in connection with its Chief Investment Office.

According to the complaint the plaintiff alleges on behalf of purchasers of JPMorgan Chase & Co. (NYSE:JPM) common stock during the period between April 13, 2012 and May 11, 2012, that JPMorgan Chase & Co. and certain of its officers and directors violated the Securities Exchange Act of 1934. Defendants issued materially false and misleading statements regarding certain securities trading by the Company’s Chief Investment Office (“CIO”).
Specifically, the plaintiff claims that defendants allegedly misrepresented and/or failed to disclose that the CIO had engaged in extremely risky and speculative trades that exposed JPMorgan to significant losses.

On May 10, 2012 JP Morgan Chase & Co said in a filing with the U.S. Securities and Exchange Commission (”SEC”) that JP Morgan’s Chief Investment Office has had significant market-to-market-losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed.” The Company estimated that its Corporate unit could post an $800 million loss in the second quarter.
During a conference call held after the market closed, on May 10, 2012, JP Morgan Chase & Co. CEO revealed that the Company lost about $2 billion on synthetic credit securities after “egregious mistakes” in its Chief Investment Office...

Shares of JPMorgan Chase & Co. (NYSE:JPM) fell from $40.74 per share on Thursday, May 10, 2012 to 35.79 on May 14, 2012, wiping out more than 18billion in market cap.

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