JPMorgan Chase & Co. agreed to pay $150 million to settle investor claims that it hid from them as much as $6.2 billion in losses caused by a trader dubbed the London Whale.
A group of pension funds accused JPMorgan of turning its chief investment office in London into a "secret hedge fund" that caused the losses. The bank told investors that the office's primary role was managing risk when in fact it was engaging in trades to generate profit, they said.
The settlement "reflects a reasonable compromise concerning the merits of lead plaintiffs' claims" and "the obstacles to prevailing at trial," the pension funds said in a filing seeking court approval of the deal.
Ohio pension funds and other plaintiffs in the case claim they incurred tens of millions of dollars of losses because their fund managers were given "false and misleading information." Bruno Iksil, who amassed positions in credit derivatives so big and market-moving he became known as the London Whale, made the trades for the bank.
Joe Evangelisti, a JPMorgan spokesman, declined to comment on the accord. The settlement was described in court papers in in New York on Dec. 18.
The complaint was filed on behalf of JPMorgan shareholders who bought stock between Feb. 24, 2010, when the company filed its 2009 earnings report with regulators, and May 21, 2012, when the bank announced it was halting a $15 billion share buyback program until it could control the losses.
The lead plaintiffs include the Arkansas Teacher Retirement System, the Ohio Public Employees Retirement System, and the state of Oregon.
In July, the U.K. Financial Conduct Authority abandoned efforts to pursue a fine of about 1 million pounds ($1.5 million) and an industry ban against Iksil. The former trader signed a non-prosecution agreement that prevents him from being charged by U.S. prosecutors in exchange for his cooperation.
Iksil's former boss, Javier Martin-Artajo, and a junior trader, Julien Grout, were indicted in the U.S. in 2013. Prosecutors alleged the pair committed securities fraud by hiding the true extent of the losses from bank management.