JPMorgan heading to trial

December 21, 2009 | By Jim Kim

Everyone is talking about the looming big SEC-Bank of America (BAC) courtroom showdown, but it's quite possible that JPMorgan (JPM)will also end up in court within a month or two. The bank has been embroiled in a dispute with billionaire Len Blavatnik, who has persuaded a State judge in New York to hear his claims against JPMorgan.

Blavatnik's company, Access Industries, claims that JPMorgan's "ill-conceived investment strategies" just before the collapse of the U.S. housing market caused a loss of at least $98M at CMMF, one of its subsidiaries, notes the Financial Times. There's still time for a settlement of course. CMMF says that when JPMorgan was retained in May 2006, "it was given broad discretion in how it invested the funds but its goal was to 'provide a high level of current income consistent with low volatility.' Specifically, it was to 'invest no more than 40 percent of the funds in asset-backed securities and a maximum of 20 percent in mortgage securities.'" There's a dispute as to how the funds were actually allocated.

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