JPMorgan Chase & Co. (NYSE:JPM) Settles Lehman Brothers Estate Dispute

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JPMorgan Chase & Co. (NYSE:JPM)

JPMorgan Chase & Co. (NYSE:JPM) has preferred to settle most of the pending disputes in respect of the defunct Lehman Brothers Holdings. The bank was the biggest creditor and was destroyed after the failure of the century-year-old financial institution’s collapse in 2008. In October, most of the claims were discarded by a judge. Financial Times quoted file documents of the court indicating that it was ready to pay $1.42 billion to settle the claims.

Clearing-Related Claims

JPMorgan Chase & Co. (NYSE:JPM)’s latest settlement was in respect of clearing-connected claims of $6.3 billion apart from $2.3 billion claims related to derivatives. The court filings indicate that the settlement resolved two of the three big litigation’s that were pending against the bank. In March 2012, Lehman emerged from bankruptcy, and the financial institution would pay $1.49 billion more. That would take the total disbursements to creditors to $106.5 billion.

Lehman estate’s attorneys demanded compensation from the bank as it was the clearing bank. Also, prior to the collapse, the JPMorgan was charged with seeking billions of collateral in respect of those claims. Lehman representatives indicated that the settlement could not be termed as global resolutions of every issue between the two parties. However, it resolved a significant amount of the disagreements.

Fair and equitable

JPMorgan Chase & Co. (NYSE:JPM)’s agreement with the representatives of Lehman, as well as, its creditors were termed as fair and equitable. Until recently, there was a general belief that most of the charges related to the financial crisis were taken into consideration by all the major banks. Therefore, no one was expecting a major settlement. In any case, the settlement would remove any ambiguity of the pending cases potential losses.

So far JPMorgan Chase & Co. (NYSE:JPM) has not responded to the reports of the settlement. The reports suggested that the settlement would not likely to have any material impact on its future earnings.

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