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JPMorgan Chase : fails to end lawsuit over London Whale losses

JPMorgan Chase : fails to end lawsuit over London Whale losses

JPMorgan Chase & Co must face a lawsuit from shareholders accusing it of securities fraud by misleading them about its ability to manage risk, which surfaced when it lost $6.2 billion in the “London Whale” scandal.

U.S. District Judge George Daniels in Manhattan said shareholders could pursue claims that JPMorgan, Chief Executive Jamie Dimon and former Chief Financial Officer Douglas Braunstein knowingly hid the increased risks that the bank’s Chief Investment Office had been taking in early 2012.

These risks allegedly manifested themselves when the bank suffered the $6.2 billion loss from trades linked to Bruno Iksil, a French national who worked in a bank office in London, causing losses for shareholders.

Daniels said shareholders could pursue claims that the bank, Dimon and Braunstein materially understated the bank’s “value at risk,” and misled them on an April 13, 2012 conference call in which Dimon labeled as a “tempest in a teapot” various news reports about a synthetic credit portfolio that Iksil managed.

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