Shareholders of JP Morgan Chase have sued the bank in two separate lawsuits, accusing the financial institution and its management of excessive risk taking that led to losses of at least $2 billion. A JP Morgan spokesman declined to comment on the lawsuits open at a court in Manhattan, a few days after general manager Jamie Dimon said that a hedging strategy error has caused a massive loss last month.
“What company is not saying is that those losses were the result of remarkable changes to the acceptable risk model, undisclosed to investors, and a similar change to one of the divisions, from one known for conservative investments firm with short-term risky transactions”, according to one of the complaints. This complaint was made by James Baker, a shareholder from California, on behalf of JP Morgan Chase, against the CEO Jamie Dimon, the Chief Financial Officer Douglas Braunstein and other members of the Board.
The second complaint was filed by financial services company Saratoga Advantage Trust, on behalf of common shareholders of JP Morgan, and claims that Dimon and Braunstein made false statements, misleading and with omissions at a conference with investors in April. Dimon said last week that the bank made “flagrant” mistakes and the losses of about $2 billion from derivative transactions were self-inflicted.
JP Morgan considers recovering bonuses from several current and former executives and employees, including the former Chief Investment Officer Ina Drew, whose division unveiled Thursday the $2 billion loss. Drew, who has been working for 30 years at JPMorgan, received last year a total package of financial compensation of $14 million, of which $7.1 million in shares, $4.7 million bonus in cash and $750,000 base salary. She announced her resignation on Monday.
Sources cited by the international press said in the past few days that JP Morgan expects resignations of three executives and could lay off all employees at the London office responsible for the loss of financial derivative transactions. The Department of Justice and Federal Bureau of Investigation (FBI) in the U.S. have begun a criminal investigation against JP Morgan Chase, after the losses of $2 billion that bank recorded in trading operations, according to a source close to the situation.
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