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Lehman sues JPMorgan for siphoning billions of dollars

Source: PTI
May 27, 2010 19:54 IST
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Lehman Brothers Holdings Inc's estate has filed a lawsuit against JPMorgan Chase, alleging that the Wall Street major siphoned billions of dollars just days before the demise of the company.

The estate oversees the bankruptcy procedure of Lehman Brothers, which collapsed in the wake of the ravaging financial crisis in September 2008.

"In the last four business days before LBHI's Chapter 11 filing, JPMorgan seized $8.6 billion in cash collateral, including over $5 billion in cash in the final business day," the lawsuit said. Lehman Brothers, then the fourth-largest US investment bank, filed for bankruptcy on September 15, 2008.

The move had rattled markets and worsened the global financial turmoil. JPMorgan was Lehman Brothers' primary clearing bank -- acting as an intermediary between the entity and its investors, among others.

"JPMorgan not only took billions of dollars more than it needed from LBHI, but also accelerated LBHI's free fall into bankruptcy by denying it an opportunity for a more orderly wind-down, costing the LBHI estate tens of billions of dollars in lost value," the lawsuit pointed out.

It said that JPMorgan even forced LBHI into a series of one-sided agreements "to siphon billions of dollars in critically-needed assets". A lawsuit has been filed with the US Bankruptcy Court in the southern district of New York.

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