US public pension funds, AP7 to lead JP Morgan class-action
GLOBAL - Five US public pension funds and Swedish buffer fund AP7 will lead a class-action alleging JP Morgan provided "false and misleading information" about its trading activity after a New York district court judge granted class-action status to the suit.
A statement earlier this year by the attorney general of US state Ohio confirmed the involvement of a Swedish national pension fund, understood by IPE to be AP7, which manages assets in the country's premium pension system.
This week's judgement granting the five US funds and AP7 lead plaintiff status follows a legal tussle over leadership of the then proposed class-action between the public pension funds on the one hand and, on the other, the US Operating Engineers' Pension Trust.. The engineers' fund had claimed leadership status based on its claim to have had the "largest financial interest" in the suit with losses of $1m (€800,000).
But three Ohio schemes - the Ohio Public Employees Retirement System, the School Employees Retirement System of Ohio, and the State Teachers Retirement System of Ohio - as well as Oregon and Arkansas public pension funds and AP7 countered with claims of US$52m in losses as a result of what the bank described as "hedges" executed by 'London Whale' Bruno Iksil.
Ohio Attorney General Mike DeWine claimed his state's schemes alone lost $27.5m.
"Not only do the public pension funds asset an aggregate financial interest that is far greater than that claimed by the operating engineers, but each constituent member of the public pension funds incurred losses that are multiples larger than the operating engineers' claimed loss," the pension funds said in filed papers.
Describing the engineers' motion to lead the class-action as "fatally defective", they pointed to the union pension fund's refusal to provide its own trading history in JP Morgan securities during the longer timeframe covered by the public pension funds' claim.
Its refusal, they said, "smacks of gamesmanship, and appears to be part of an effort by Operating Engineers' counsel to gain control of the litigation using a truncated class period".
The public pension funds argued that they formed "a small cohesive group or sophisticated institutional investors" and were therefore "the prototypical lead plaintiff" - not least because they had no conflict of interest with other investors involved in the class action.
The operating engineers' scheme had made its own claim to typicality, arguing that it was "not subject to unique defenses and [that there was] no evidence that it seeks anything other than the greatest recovery from the class consistent with the merits of the claims".