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JP Morgan Agrees To A $75 Million Settlement Over Fund Performance

A class of investors who sued JPMorgan Chase & Co. over the performance of several stable value funds that held mortgage-backed securities during the financial crisis told a federal judge in Manhattan last month that they have reached a $75 million settlement with the bank. The investors, who were recognized as a class earlier this year, laid out the details of the settlement reached with the help of a mediator, and they urged the court to tentatively approve the settlement.

Lawyers for the Plaintiffs said the settlement gives investors, many of whom are near retirement, a percentage of the value of the estimated underperformance of their funds without the risk of coming up empty-handed or facing appeals that would delay their relief. The lawyers wrote in their request:

Instead of the additional time it would take to resolve this action and the considerable risk that the result could be adverse, under the settlement, $75,000,000 will be deposited in an interest-bearing account, which will benefit the class if the settlement is finally approved. In sum, a settlement at this stage avoids further motion practice raising various issues around causation and proof of damages.

Under the terms of the settlement, class members – who suffered between $410 million and $555 million in total damages, according to their expert witness – will be paid based on the amount between the actual performance of their investments and the Barclays Intermediate Aggregate Index, a benchmark index. The suit, filed in April 2012, accuses the finance giant of breaching its fiduciary duty under the Employee Retirement Income Security Act by heavily investing its stable value funds, which are supposed to protect against market volatility. Those funds were allegedly invested in JPM’s risky Intermediate Bond Fund and the Intermediate Public Bond Fund, which held mortgage-backed bonds, in 2009 and 2010.

Since the class and two subclasses of investors were recognized earlier this year, lawyers for the investors say they have continued to work hard to win relief for their clients, with a total of 800,000 pages of discovery produced and 40 fact witnesses and five experts being deposed over the course of the case. They told the court that the recovery represented good value for the class and was negotiated with the help of experienced Employee Retirement Income Security Act (ERISA) mediator Hunter Hughes.

Class Representation

The class is represented by:

  • Michael Mulder and Elena Liveris of the Law Offices of Michael Mulder
  • Todd Schneider, Garrett W. Wotkyns and Jason Kim of Schneider Wallace Cottrell Konecky Wotkyns LLP
  • Kevin Madonna of Kennedy & Madonna LLP
  • Joseph Peiffer and Daniel J. Carr of Peiffer Rosca Wolf Abdullah Carr & Kane APLC
  • and Peter J. Mougey and Laura Dunning of Levin Papantonio Thomas Mitchell Rafferty & Proctor PA

The case is In re J.P. Morgan Stable Value Fund ERISA Litigation, (case number 1:12-cv-02548) in the U.S. District Court for the Southern District of New York.


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