On April 26, 2007, the plaintiffs filed an appeal from the March 29, 2007 Memorandum and Opinion and Clerk’s Judgment which granted the defendants’ motion to dismiss the Second Amended Complaint with prejudice. The appeal is currently pending in the U.S. Court of Appeals for the Second Circuit.
According to a press release dated March 30, 2007, a Manhattan federal judge has dismissed a class-action lawsuit accusing JPMorgan Chase of helping Enron hide fraud. The plaintiffs asserted that they bought JPMorgan stock based on the bank’s reputation for integrity and financial discipline, when in fact the company was helping Enron, a major client, hide billions of dollars of debt. In a ruling released yesterday, Judge Sidney H. Stein said the plaintiffs failed to show that JPMorgan deceived them by playing down its exposure to Enron or overstating its own reputation for integrity. Judge Stein dismissed the complaint with prejudice, meaning the plaintiffs cannot raise their assertions again. He had dismissed an earlier complaint in March 2005, but allowed the plaintiffs to refile their case. A lawyer for the plaintiffs did not immediately return a call seeking comment. A JPMorgan spokesman, Adam Castellani, declined to comment. JPMorgan agreed in June 2005 to pay $2.2 billion to resolve a class-action lawsuit by former Enron investors over the energy trader’s 2001 collapse. It has also agreed to pay $350 million in separate litigation brought by Enron’s liquidators.
On June 28, 2005, a Second Amended Complaint was filed by the plaintiffs against the defendants.
According to a press release dated March 30, 2005, JP Morgan Chase won an important victory in a securities fraud case arising from its dealings with Enron. In a 61-page opinion dated Monday, Southern District of New York Judge Sidney Stein granted JP Morgan's motion to dismiss a securities class action brought by the bank's shareholders. Judge Stein concluded that plaintiffs failed to meet the standard of proof required in a securities class action and dismissed the claims.
The Complaint charges JP MORGAN with violations of federal securities laws. Among other things, plaintiff claims that defendant's material omissions and the dissemination of materially false and misleading statements caused JP MORGAN's stock price to become artificially inflated, inflicting enormous damages on investors. More specifically, on the first day of the Class Period, JP MORGAN recklessly issued a public statement which did not fully disclose its risk and loss exposure related to its transactions and dealings with the Enron Corporation, the company notorious for its financial collapse. At the time, JP MORGAN listed its total exposure in this regard at approximately $900 million. JP MORGAN later announced that, in fact, its total Enron related exposure was actually about $2.6 billion, or almost three times the earlier figure. Shortly thereafter, J.P. Morgan wrote down $1.13 billion in nonperforming assets, specifically related to losses generated by its dealings with Enron.