I thought this was thought provoking, very interesting read.
JP MORGUE Chase: Jamie Dimon is the Biggest THIEF of the 21st Century.
Summary of Claim - Overview
35. In and around 2004, JPMC's then-Chief Operating Of?cer, James Dimon, resolved to improve JPMC's lack of market presence on the West Coast and in the south.
Dimon would, in 2005, take over JPMC as Chairman and Chief Executive Of?cer. JPMC' sshareholders had been clamoring for Washington Mutual's network of bank branch holdings on the West Coast and south, and its large deposit base. Dimon, in response, promised to acquire banks in "fast-growing markets such as Florida, New Jersey and California," according to a March 28, 2005 Business Week article.
36. On July 29, 2004, at a company meeting with JPMC's branch managers, Dimon declared "Retail is not only here to stay, but you are a tremendous asset" Dimon promised to push to expand the retail business. Later that month, Dimon told analysts on a conference call that JPMC would be in position to make a "major acquisition" by early 2006. Upon information and belief, the intended "major acquisition" referred to by Dimon was Washington Mutual.
37. In January of 2005, in order to place insiders in his targeted company, Dimon sent a number
of senior and junior executives to Washington Mutual to begin "new chapters"in their lives. The most signi?cant transfer to Washington Mutual was Stephen J. Rotella, an I8-year veteran of JPMorgan Chase, who held the posts of chief executive of?cer for Chase Home Finance, executive vice president for JPMorgan Chase, and member of the JPMorgan Chase executive committee. At Washington Mutual, Rotella took the job of president and chief operating of?cer.
38. In addition to Rotella, at least four senior vice presidents and a chief ?nancialof?cer transferred from JPMC to Washington Mutual as plants in late 2004 and 2005. These included, Steve Fortunato, a 12 year veteran ofJPMC serving as Senior Vice President, Chase Home Finance, who was responsible at JPMC for, among other things, merger analysis, forecasting and mortgage servicing valuation; Tai Bindm, Chief Financial Of?cer and Executive Vice President for Chase Home Finance; John Berens, senior vice president of default services, managing over 2,000 JPMC employees; Youyi Chen, PhD, senior vice president responsible for managing the interest rate risks of JP Morgan Chase's mortgage servicing rights (MSR) portfolio; and Bill Murray, a senior vice president, led the MSR valuation, pricing and reporting functions for JPMC's Capital Markets group. Upon information and belief, Rotella and the other JPMC executives that transferred to Washington
Mutual understood and agreed to help with Dimon's long term plan and goal for JPMC to acquire Washington Mutual, and thereafter provided substantial assistance to that end.
39. JPMC's and CEO Dimon's strategy of gaining an insider position was a well-trodden approach for them. They used this approach in 2006 to gain con?dential information regarding a client's natural gas derivatives trading positions, Amaranth. JPMC and Dimon used this con?dential information and misstatements about Amaranth's solvency to prevent
attempts to sell a block of its natural gas position to an outside party. JPMC inserted itself into the deal and reaped a pro?t of more than $725 million. As reported by an online news source on November 15, 2006 and later cited in Amaranth's lawsuit against JPMC, a JPMC executive boasted of JPMC's ability to leverage its inside information sources:
"We are not exposed from a credit perspective, materially, which allows us to
respond quickly to opportunities when they come up. Amaranth was one
obvious example of that. I imagine there will be others as we go through time
where our ability to be on the inside, but not compromised, is extremely
powerful."
40. From 2005 to 2007, upon information and belief, JPMC gathered non-public
information from Rotella and the other former .JPMC executives placed at Washington Mutual relating to Washington Mutual's banking and mortgage markets, and statuses in those markets.
In addition, JPMC gathered this information regarding Washington Mutual and other banks from government regulators and monetary policymakers at the Of?ce of the Comptroller of the Currency, OTS, FDIC, Federal Reserve, and other individuals in governmental positions of power. JPMC used this information to build a "fortress balance sheet," from which it could later acquire Washington Mutual.
41. In 2006, Washington Mutual's credit rating was securely investment grade.
However, beginning in 2006 and continuing through 2008, lending institutions faced a dif?cult business environment due to a deteriorating housing market, an increase in mortgage delinquencies and foreclosures, illiquidity and loss of value of asset-backed and mortgage-backed securities, and a general downturn in the global credit markets.
42. In April of 2008, despite having posted signi?cant losses, Washington Mutual'scredit was still investment grade and the company was solvent and liquid. At this time, JPMC made its ?rst attempt to acquire Washington Mutual, making a public offer to purchase Washington Mutual for $8 a share, or about $7 billion, in JPMC stock. Washington Mutual declined, and instead accepted a capital infusion by a private investor group of approximately $7 billion, at $8.75 per share.
43. The rejection did not deter JPMC, however. Instead, upon information and belief, JPMC began to exert pressure on the OTC, FDIC and other regulators to intensify oversight and reporting requirements of Washington Mutual, with the end goal of closing Washington Mutual in a seamless transfer of the valuable, cherry-picked, assets, while leaving the liabilities, to .JPMC. his was not the ?rst time JPMC pressured government of?cials to gain undue advantage in its efforts to bid for an ailing competitor. As Reuters and the Washington Post reported in articles published on October 22, 2008, according to an "anonymous but speci?c" complaint to Senator Chuck Grassley, the ranking Republican on the Senate Finance Committee, the general counsel for JPMC and the enforcement director for the U.S. Securities and Exchange Commission had inappropriately discussed the details of SEC investigations into Bear Stearns in relation to JPMC's efforts to acquire Bear Stearns in March of 2008. Sen. Grassley, in a letter to SEC Chairman Christopher Cox, stated that Linda Thomsen, the SEC enforcement director, gave inside information to Stephen Cutler, the General Counsel ofJPMC (and himself a former SEC enforcement director), about the state of SEC investigations intoBear Stearns, which enabled JPMC to put together a low-ball bid to purchase Bear Stearns. JPMC ultimately won the Bear Stearns bidding with a bid of $2 per share, after the company had previously traded at $30.85 per share. JPMC later agreed to raise the price to about $10 per share. As Sen. Grassley's stated regarding JPMC's misuse of its personal relationship with an SEC of?cial,
"This inside information, gotten through a personal relationship, would be critical in helping Morgan put together a low-bid Bear and the US government.”
45. In the Washington Mutual case, because of JPMC's pressure, U.S. Treasury
helping Secretary Henry Paulson in July of 2008 personally telephoned Washington Mutual's Chief Executive Of?cer and advised him to sell Washington Mutual to JPMC. As reported in a Morgan
November 9, 2008 Seattle Times article citing Washington Mutual executives, Paulson warned the Washington Mutual's then-CEO, Kerry Killinger, "You should have sold to JP Morgan Chase in the spring, and you should do so now. Things could get a lot more dif?cult for you."
46. During the summer of 2008, Defendants (JP Morgan Chase) engineered a campaign involving adverse media "leaks," stock sales, and deposit withdrawals designed to distort the market and regulatory perception of Washington Mutual's ?nancial health. Defendants (JP Morgan Chase) continued this campaign up until the seizure of WMB.
47. On or about September 4, 2008, the FDIC and JPMC discussed FDIC's oversight of Washington Mutual, according to a Wall Street Journal article dated September 29, 2008. The article cited "people familiar with the situation," who stated that the FDIC told JPMC that "the FDIC was carefully monitoring WaMu and that a seizure of its assets was likely." In addition, the FDIC told JPMC it wanted to immediately auction off the assets after the seizure. Therefore, upon information and belief, at or about the time of this communication, JPMC and the FDIC agreed to a plan whereby federal regulators would seize WMB and certain valuable assets would be passed to .JPMC, and certain liabilities excluded. From September 4, 2008 to September 25, 2008, JPMC and FDIC continued discussions regarding seizure of WMB and JPMC's purchase of WMB's valuable assets and stripping away WMB’s liabilities.
48. During late July and early September of 2008, the FDIC exerted pressure upon the OTS to seize WMB. A Wall Street Journal article dated September 27, 2008, stated that this pressure, and OTS's reluctance to downgrade Washington Mutual, continued for weeks.
49. On September 7, 2008, Washington Mutual entered into a memorandum of understanding with the OTS concerning "aspects of the banks operations, principally in several areas of its risk management and compliance functions, including its Bank Secrecy Act. compliance program." In this memorandum of understanding, Washington Mutual committed to provide the oars "an updated, multi-year business plan and forecast for its earnings, asset quality, capital and business segment performance." However, the business plan did not require the company to raise capital, increase liquidity or make changes to the products and services it provides to customers.
50. On September II, 2008, Washington Mutual released preliminary third quarter ?nancial results, which showed that the company was well capitalized and liquid. In its release, the company stated "Mlle company continues to maintain a strong liquidity position with
approximately $50 billion of liquidity from reliable funding sources. The
company's tier I leverage and total risk-based capital ratios at June 30, 2008
were 7.76% and 13.93%, respectively, which were signi?cantly above the
regulatory requirements for well-capitalized institutions. The company expects
both ratios to remain signi?cantly above the levels for well-capitalized
institutions at the end of the third quarter."
51. On or about September 12, Washington Mutual hired Goldman Sachs as an advisor to help ?nd a buyer for Washington Mutual.
52. On September 12, 2008, the Bloomberg ?nancial news organization reported
that .JPMC was in "advanced talks" to buy Washington Mutual. Negotiations were described as being conducted "at the highest levels of both companies" and included JPMC's CEO Dimon and Washington Mutual's CEO Alan Fishman. The government was not involved.
53. Based on its ongoing negotiations with the FDIC and the manner in which .JPMC later obtained Washington Mutual's assets, JPMC's "negotiations" with Washington Mutual were a sham and a pretext designed to gain access Washington Mutual's con?dential
?nancial information. JPMC misrepresented to Washington Mutual that it would negotiate in good faith for the purchase of the company. It is apparent from the fact that the Washington Mutual board of directors and of?cers were unaware of the inuninent seizure and simultaneous sale of WMB to JPMC, that JPMC did not disclose that it was negotiating separately with the FDIC for the seizure of WMB and purchase of its asgets. The fact that JPMC made no serious offer to Washington Mutual during September of 2008 for the purchase of the entire entity, but instead negotiated with the FDIC for the purchase of the cherry-picked assets out of receivership indicates that JPMC never had any intention to directly deal with Washington Mutual regarding purchase of Washington Mutual or any part thereof.
-------------------------------------------------------------------
20. In September of 2008, motivated by greed and unrestrained by moral or legal boundaries, the Defendants (JP Morgan Chase) exploited a perceived liquidity crisis in the banking industry to improperly and illegally take advantage of the ?nancial dif?culties of Washington Mutual, Inc.
("WM1'), the nation's largest savings and loan association. Defendants (JP Morgan Chase) used the crisis as a backdrop and lever to negotiate the seizure and sale of the banking operations of WMI--Washington Mutual Bank, Henderson, NV and Washington Mutual Bank, FSB, Park City, UT (together, "Washington Mutual Bank" or "WMB")--stripped of liabilities, from federal regulators. In negotiating with the federal regulators, JPMC misused con?dential ?nancial information of WMI and WMB (collectively referred to as "Washington Mutual") that it had gained through deceptive means and under false pretenses. JPMC's purchase of WashingtonMutual's core operations from federal regulators culminated a years-long scheme designed to wrongfully exploit the opportunity of a ?nancial crisis in Washington Mutual.
21. On September 25, 2008, after weeks of pressure by the Defendants (JP Morgan Chase) upon Federal
Deposit Insurance Corporation (the "FDIC") and other federal regulators, the FDIC and the Of?ce of Thrift Supervision (the "OTS") agreed to the Defendants (JP Morgan Chase)' terms. On that day, the OTS seized Washington Mutual Bank ("WMB"), passed the bank to the FDIC as receiver, and the FDIC sold the crown jewels of Washington Mutual to ..JPMC at a ?re sale price. In the deal, JPMC acquired the extensive banking franchise of Washington Mutual for the severely undervalued sum of 31.9 billion.
AI
