Investor Lawyers Blog
Christopher J. Gray, P.C. filed a lawsuit on January 27, 2009 against JPMorgan Chase & Co. on behalf of an investor who incurred substantial losses in his trades in Bear, Stearns options between March 12 and 14, 2008- in the immediate aftermath of statements by the senior management of Bear, Stearns to the effect that its liquidity and balance sheet remained strong. The firm’s client sued JPMorgan Chase as successor in interest to Bear, Stearns, which it acquired in May 2008.
The plaintiff incurred his losses when the price of Bear, Stearns shares plummeted from $57.00 on March 13, 2008 to as low as $4.30 a share on March 17, 2008 as material adverse information concerning the Company’s liquidity, financial condition and book value emerged between March 14 and 17, 2008.
The case alleges that Bear, Stearns omitted to disclose important facts that had emerged and that Bear, Stearns management knew , including:
- That the Company’s book value, stated as $84 a share and reaffirmed by management as late as March 12, 2008, was completely inaccurate and should have been reported as substantially lower prior to March 12, 2008, due to substantial impairment of the value of the Company’s mortgage-related assets
- that the Company’s risk-weighted assets- or assets that might be worth drastically less than the value at which they were carried on Bear’s books- equaled $220 billion, meaning that even a small loss in value by the risk-weighted assets would materially decrease the Company’s book value prior to March 12, 2008
- that the Company’s lenders including ING Groep NV and certain “repo” lenders had pulled billions in credit lines from Bear, Stearns
- that the Federal Reserve’s credit facility to Bear, Stearns via JPMorgan announced on March 14, 2008 was not guaranteed to last for up to 28 days and was not unconditionally available “as needed,” and in fact the Federal Reserve and the Treasury Department had advised Bear, Stearns that its fate was no longer in its own hands and that the government reserved the right to shut down the credit facility immediately.
Investors or others who wish to review the full complaint may e-mail newcases@investorlawyers.net for a copy.