Securities Litigation: JP Morgan Chase

In Re: JP Morgan Chase Securities Litigation (Enron)
USDC SD New York

Litigation background

Lead Plaintiffs

SEC disclosure

Form 10-K 2.29.08 at page 9
In a purported, consolidated class action lawsuit by JPMorgan Chase stockholders alleging that the Firm issued false and misleading press releases and other public documents relating to Enron in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the United States District Court for the Southern District of New York dismissed the lawsuit in its entirety without prejudice in March 2005. Plaintiffs filed an amended complaint in May 2005. The Firm moved to dismiss the amended complaint, which the court granted with prejudice on March 28, 2007. Plaintiffs appealed the dismissal, which is fully briefed and pending in front of the United States Court of Appeals for the Second Circuit.

Motion to dismiss

Opinion

First amended complaint
Plaintiffs have only pled scienter with particularity in connection with the fact that JPM Chase's prepay transaction with Enron were characterized improperly as trading assets rather than as loan assets. However, that distinction alone would not have been material to investors. Plaintiffs have not properly pled scienter with respect to JPM Chase's failure to treat the prepays as impaired assets rather than as viable assets. Consequently, defendants' motion to dismiss the complaint is granted without prejudice. Plaintiffs may serve and file second amended complaint on or before 4.29.05. (Signed by Judge Sidney H. Stein on 3.28.05).

In re JP Morgan Chase Securities Litigation,
02 Civ. 1282, 2007 U.S. Dist. LEXIS 22948
(S.D.N.Y. Mar. 29, 2007)
Second amended complaint
Having been given the opportunity to amend their pleadings, plaintiffs still have pled scienter with particularity only in connection with the fact that JPM Chase's prepay transactions with Enron were characterized improperly as trading assets rather than as loan assets - and that distinction alone would not have been material to investors. Plaintiffs have thus failed to state a claim for securities fraud. Defendants' motion to dismiss the SAC is therefore granted with prejudice. Motion terminated. (Signed by Judge Sidney H. Stein on 3.28.07) (rag) Modified on 4.02.07.

Appeal by plaintiffs

Lead plaintiff

Company defense

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