Home The Lodge

JPMorgan Liable To Leonard Blavatnik Over Mortgage Losses

NEW YORK, Aug 26 (Reuters) - A New York state judge found JPMorgan Chase & Co liable to Russian-American billionaire Leonard Blavatnik for breach of contract for stuffing an investment account he held with risky subprime mortgage securities, and ordered the bank to pay more than $50 million of damages including interest.



  • JulietJuliet Posts: 0
    Instead, the bank allegedly breached a 20 percent limit set for mortgage-backed securities by misclassifying securities backed by a pool of subprime loans, known as ABS-home equity loans, as asset-backed rather than mortgage-backed securities.

    Access also accused JPMorgan of continuing to hold the troubled securities despite knowing they were inappropriate for the portfolio. CMMF closed the account in May 2008.

    In finding JPMorgan liable for exceeding the 20 percent cap, Schweitzer rejected the bank's argument that "industry practice" was to classify the home equity loans separately from mortgage securities because they carried different risks.

    The judge was wrong. Securities backed by home equity loans are always listed as ABS in GAAP statements.
  • JulietJuliet Posts: 0
    Didn't take long for that drift. And he goes for the technicality dodge.
  • JulietJuliet Posts: 0
    Sorry, but reading is fundamental Greenie. JPM was found liable on this technicality.

    In ruling for JPMorgan on the negligence claim, Schweitzer said the mortgage securities were considered "relatively safe and desirable" when they were bought, and that JPMorgan acted reasonably in light of current conditions when it advised CMMF to "wait out the storm" rather than sell at depressed prices.

    Doh! Next time, try bait.

Leave a Comment

BoldItalicStrikethroughOrdered listUnordered list
Align leftAlign centerAlign rightToggle HTML viewToggle full pageToggle lights
Drop image/file
Magazine Cover

GET THE MAGAZINE Subscribe & Save

Temporary Price Reduction.


Give a Gift   |   Subscriber Services


GET THE NEWSLETTER Join the List and Never Miss a Thing.

Get the top Fly Fisherman stories delivered right to your inbox.