by Christopher Freeburn | August 27, 2013 10:23 am
The mortgage meltdown will cost JPMorgan Chase (JPM) another payout of more than $50 million.
That’s how much the bank will have to pay Leonard Blavatnik after a New York State court ruled that JPMorgan had breached its contract with the Russian billionaire by loading his investment accounts with mortgage-backed securities that went bad. The judgement includes damages of $42.5 million, plus annual interest of 5% dating from May 2008. The billionaire filed suit against the bank in 2009, BusinessDay notes.
Blavatnik, who is worth an estimated $16 billion, originally demanded $100 million in damages, claiming breach of contract and negligence. His company, Access Industries Group had invested $1 billion with JPMorgan. In his lawsuit, Blavatnik said that the bank was contractually restricted from allocating more than 20% of his investment in mortgage-backed securities, but evaded that limit by deliberately misclassifying sub-prime mortgage-backed securities as asset-backed securities.
A non-jury trial took three weeks earlier this year, but the New York Supreme Court judge didn’t issue his ruling until last week.
The judge did clear JPMorgan of negligence, finding that the mortgage-backed securities were thought to be a safe investment when they were purchased.
Shares of JPMorgan fell almost 1% in Tuesday morning trading.
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