JPMorgan Chase & Co (NYSE:JPM) will pay Russian billionaire Leonard Blavatnik $50 million in damages after losing a case filed by the latter. Blavatnik filed a suit against JP Morgan after he incurred losses due to the downfall of the United States subprime mortgage market, says a report from BBC.
JPMorgan Chase & Co (NYSE:JPM) was charged with breaching a contract with Mr. Blavatnik’s investment fund and was found guilty by New York judge Melvin Schweitzer.
JPMorgan not charged for negligence
In his ruling, Judge Schweitzer said that JPMorgan Chase & Co (NYSE:JPM) should pay $42.5 million damages, plus interest at 5 percent a year from 2008. However, the judge did not admit that JP Morgan was negligent as, at that time, the investments were considered to be reasonable.
Spokesman Doug Morris of JPMorgan Chase & Co (NYSE:JPM) said that the bank is pleased with court rejecting CMMF’s negligence claims, and maintaining that their investment professionals acted in good faith. He added that the bank respectfully denies what the court has understood was an agreement between the bank and CMMF, and is considering options to pursue the matter further.
Bank breached a set limit
Blavatnik, one of the world’s richest men, sued JPMorgan Chase & Co (NYSE:JPM) in 2009 to recover more than $100 million. Blavatnik claimed that the investment bank assured him they would invest his money more conservatively after opening an account in 2006.
However, Blavatnik holds that the bank breached the 20 percent limit set for mortgage-backed securities by not classifying the securities in a correct manner and accounting for subprime loans.
Mr. Blavatnik was also relieved by the decision and said he feels that there are a number of people who cannot afford to file suit against such a huge bank. “They shouldn’t have to,” he said in a statement. “JPMorgan Chase & Co (NYSE:JPM) should do the right thing because it is the right thing to do.”
David Elsberg, a partner at Quinn Emanuel Urquhart & Sullivan representing Blavatnik, said during an interview that the ruling comes as a liability upon banks to comply with obligations to the client. And as has been pointed out by the court, banks should not use the excuse of so-called “industry practice” to avoid such claims.
Blavatnik’s total worth is about $16 billion, which makes him the 44th richest person in the world, according to Forbes magazine.