Pension Fund Wants JPMorgan Bosses to Pay

     MANHATTAN (CN) – A state pension plan asked a federal judge to order the top directors of JP Morgan Chase & Co. to repay the bank the $88.3 million it was fined for violating federal sanctions on trading with enemies and terrorists, including Cuba, Iran, Sudan, and Liberia.



     On Aug. 25, JP Morgan agreed to pay the U.S. Department of Treasury $88.3 million for serial violations of international sanctions, including Global Terrorism Sanctions Regulations and Weapons of Mass Destruction Proliferators Sanctions. The settlement was the largest ever paid by a U.S.-based bank for sanctions violations, the Treasury Department said.
     Suing derivatively on behalf of the bank, the Louisiana Municipal Employees Retirement System wants CEO James Dimon and 10 other top officers and directors to pay back the bank.
     The pension plan claims JP Morgan’s Board of Directors let the violations continue for 5½ years, despite being put on notice repeatedly. The pension plan claims this assertion was corroborated by the Treasury Department in August, when it released details of the investigation, which included JP Morgan’s being informed of its violations by another financial institution.
     The Treasury Department said JP Morgan conducted an internal investigation and reported the results to management. But the Treasury said in a statement that the bank “failed to take adequate steps to prevent further [wire] transfers” or to notify federal regulators.
     As a result, the pension plan says, “the misconduct occurred, unchecked, under the defendants’ watch because of their complicity in the improprieties alleged herein. Because of its acquiescence in the schemes, JPMC’s board cannot be disinterested and independent.”
     The plaintiff adds: “By permitting these violations of law to continue for over a prolonged period after being put on notice numerous times, the board utterly failed to exercise adequate oversight over JP Morgan.”
     The pension plan seeks additional damages for the cost of whatever remedial measures are put in place, the damage to the company’s goodwill, and costs associated with increased regulatory scrutiny.
     It also seeks restitution, disgorgement of the defendants’ profits, benefits and other compensation, an order directing JP Morgan to take all necessary steps to reform its corporate governance, and damages for breach of fiduciary duty, unjust enrichment, gross mismanagement and waste of corporate assets.
     Named as defendants in addition to the bank itself and CEO Dimon are board members James S. Crown, William H. Gray, Laban P. Jackson Jr., Crandall C. Bowles, Lee R. Raymond, Ellen V. Futter, David C. Novak, William C. Weldon, Stephen B. Burke, and David M. Cote.
     The retirement fund is represented by Marc I. Gross with Pomerantz, Haudek, Grossman & Gross.

%d bloggers like this: