JPMorgan are in the headlines again as they pay Lehman $1.42 billion to settle a lawsuit accusing it of draining the Lehman Brothers Holding Inc of “critical liquidity” days before the September 2008 collapse.
The settlement requiring approval by the U.S. Bankruptcy Judge Shelley Chapman, revolves around an accusation against JPMorgan exploiting Lehman to siphon billions of dollars to prop their collateral just before Lehman’s bankruptcy sparked the global financial crisis. The charge made by Lehman suggests JPMorgan didn’t need the leverage, and only extracted the windfall at Lehman’s expense.
“While the Settlement Agreement is not a global resolution of all issues between the parties, it ends a significant portion of their disagreements. The compromises set forth in the Settlement Agreement are a fair and equitable resolution,” said lawyers for Lehman.
When Lehman filed for bankruptcy, it became the largest in U.S. history. Once the fourth largest bank on Wall Street with a reported $639 billion in assets, the monumental crash sent waves through the global economy.
The pay out by JPMorgan comes months after a court ruled in their favor, stating they had “no obligation to keep Lehman alive” finding them not guilty on defrauding it into providing collateral.
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