JP Morgan Chase 2015 Annual Report Download - page 309

JPMorgan Chase & Co./2015 Annual Report 299
of JPMorgan Chase Bank, N.A. on most of the claims against
it that the Bankruptcy Court had not previously dismissed,
including the claims for duress and fraud. The District Court
also denied LBHI’s motion for summary judgment on certain
of its claims and for dismissal of the Firm’s counterclaims.
The claims that remained following the District Court’s
ruling challenged the propriety of the Firm’s post-petition
payment, from collateral posted by LBHI, of approximately
$1.9 billion of derivatives, repo and securities lending
claims.
In the Bankruptcy Court proceedings, LBHI and several of its
subsidiaries that had been Chapter 11 debtors had filed a
separate complaint and objection to derivatives claims
asserted by the Firm alleging that the amount of the
derivatives claims had been overstated and challenging
certain set-offs taken by JPMorgan Chase entities to recover
on the claims. In January 2015, LBHI filed claims objections
with respect to guaranty claims asserted by the Firm arising
from close-outs of derivatives transactions with LBI and one
of its affiliates, and a claim objection with respect to
derivatives close-out claims acquired by the Firm in the
Washington Mutual transaction.
In January 2016, the parties reached an agreement,
approved by the Bankruptcy Court, under which the Firm
will pay $1.42 billion to settle all of the claims,
counterclaims and claims objections, including all appeal
rights, except for the claims specified in the following
paragraph. One pro se objector is seeking to appeal the
settlement.
The settlement did not resolve the following remaining
matters: In the Bankruptcy Court proceedings, LBHI and the
Committee filed an objection to the claims asserted by
JPMorgan Chase Bank, N.A. against LBHI with respect to
clearing advances made to LBI, principally on the grounds
that the Firm had not conducted the sale of the securities
collateral held for its claims in a commercially reasonable
manner. In January 2015, LBHI brought two claims
objections relating to securities lending claims and a group
of other smaller claims. Discovery with respect to these
objections is ongoing.
LIBOR and Other Benchmark Rate Investigations and
Litigation. JPMorgan Chase has received subpoenas and
requests for documents and, in some cases, interviews,
from federal and state agencies and entities, including the
DOJ, the U.S. Commodity Futures Trading Commission
(“CFTC”), the U.S. Securities and Exchange Commission
(“SEC”) and various state attorneys general, as well as the
EC, the FCA, the Canadian Competition Bureau, the Swiss
Competition Commission and other regulatory authorities
and banking associations around the world relating
primarily to the process by which interest rates were
submitted to the British Bankers Association (“BBA”) in
connection with the setting of the BBA’s London Interbank
Offered Rate (“LIBOR”) for various currencies, principally in
2007 and 2008. Some of the inquiries also relate to similar
processes by which information on rates is submitted to the
European Banking Federation (“EBF”) in connection with
the setting of the EBF’s Euro Interbank Offered Rates
(“EURIBOR”) and to the Japanese Bankers’ Association for
the setting of Tokyo Interbank Offered Rates (“TIBOR”), as
well as processes for the setting of U.S. dollar ISDAFIX rates
and other reference rates in various parts of the world
during similar time periods. The Firm is responding to and
continuing to cooperate with these inquiries. As previously
reported, the Firm has resolved EC inquiries relating to Yen
LIBOR and Swiss Franc LIBOR. In May 2014, the EC issued a
Statement of Objections outlining its case against the Firm
(and others) as to EURIBOR, to which the Firm has filed a
response and made oral representations. Other inquiries
have been discontinued without any action against
JPMorgan Chase, including by the FCA and the Canadian
Competition Bureau.
In addition, the Firm has been named as a defendant along
with other banks in a series of individual and putative class
actions filed in various United States District Courts, in
which plaintiffs make varying allegations that in various
periods, starting in 2000 or later, defendants either
individually or collectively manipulated the U.S. dollar
LIBOR, Yen LIBOR, Swiss franc LIBOR, Euroyen TIBOR and/or
EURIBOR rates by submitting rates that were artificially low
or high. Plaintiffs allege that they transacted in loans,
derivatives or other financial instruments whose values are
affected by changes in U.S. dollar LIBOR, Yen LIBOR, Swiss
franc LIBOR, Euroyen TIBOR or EURIBOR and assert a
variety of claims including antitrust claims seeking treble
damages. These matters are in various stages of litigation.
The U.S. dollar LIBOR-related putative class actions and
most U.S. dollar LIBOR-related individual actions were
consolidated for pre-trial purposes in the United States
District Court for the Southern District of New York. The
Court dismissed certain claims, including the antitrust
claims, and permitted other claims under the Commodity
Exchange Act and common law to proceed. Certain plaintiffs
appealed the dismissal of the antitrust claims, and the
United States Court of Appeals for the Second Circuit
dismissed the appeal for lack of jurisdiction. In January
2015, the United States Supreme Court reversed the
decision of the Court of Appeals, holding that plaintiffs have
the jurisdictional right to appeal, and remanded the case to
the Court of Appeals for further proceedings. The Court of
Appeals heard oral argument on remand in November
2015.
The Firm is one of the defendants in a number of putative
class actions alleging that defendant banks and ICAP
conspired to manipulate the U.S. dollar ISDAFIX rates.
Plaintiffs primarily assert claims under the federal antitrust
laws and Commodities Exchange Act.
Madoff Litigation. Various subsidiaries of the Firm, including
J.P. Morgan Securities plc, have been named as defendants
in lawsuits filed in Bankruptcy Court in New York arising out
of the liquidation proceedings of Fairfield Sentry Limited
and Fairfield Sigma Limited, so-called Madoff feeder funds.