Lehman Brothers Sues JPMorgan For Shady Funds Extraction
May 27, 2010
(ChattahBox) – JP Morgan has announced that they will be suing JPMorgan, who they say siphoned $8.6 billion in assets a few days before they filed for bankruptcy.
According to the court document, JPMorgan began removing collateral in huge amounts in the week prior to Lehman’s record bankruptcy, with $3.6 billion being taken in the first four business days, and $5 billion the day before the paperwork was officially filed.
JPMorgan acted as a middleman in all dealing between Lehman Brothers and other companies, putting it into a unique position to see intimate details about their inner workings.
Lehman accuses JPMorgan of using this access to keep an eye on their pending bankruptcy, and then snatched up the assets at the last moment.
They had also known well before of the financial woes of the bank, and so forced them to put up increasingly high collateral that they eventually withdrew, or they refused to broker clearings.
“With this financial gun to Lehman’s head, JPMorgan was able to extract extraordinarily one-sided agreements from Lehman literally overnight. Those billions of dollars in collateral rightfully belong to the Lehman estate and its creditors,” the complaint claims.
Lehmans is trying to make it out that this was a significant factor in the fall of the institution, but JPMorgan, and most following the banking crash, disagree.
JPMorgan fired back at the claims, stating that “it was the ill-advised decisions of Lehman and its principals to take on perilous leverage and to double down on subprime mortgages and overpriced commercial real estate — and not conduct by our firm — that led to Lehman’s demise.”
While the sudden withdraw may have been shady, no one can deny that the bank dug its’ own grave long before the incident in question.