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JPMorgan Chase to pay nearly $800 million in final Lehman Brothers settlement

Pushes total settlement costs well above $2 billion

JPMorgan Chase disclosed Wednesday that it reached a final settlement agreement with Lehman Brothers, ending the failed investment bank’s lawsuit over claims that JPMorgan illegally siphoned billions of dollars from Lehman before its collapse.

JPMorgan Chase’s final settlement payout checks in at well above $2 billion.

According to a filing with the Securities and Exchange Commission, JPMorgan Chase will pay an additional $797.5 million to Lehman Brothers to settle all remaining “lawsuits, claims, objections and other disputes” brought by Lehman Brothers after its collapse.

The settlement ends Lehman Brothers claims against JPMorgan Chase.

Last year, JPMorgan Chase announced that it agreed to pay $1.42 billion to Lehman Brothers to settle a “significant portion” of Lehman’s claim against the bank.

Per this report about last year’s settlement from Reuters, Lehman Brothers originally wanted $8.6 billion from JPMorgan Chase.

From Reuters:

It resolves the bulk of an $8.6 billion lawsuit accusing JPMorgan of exploiting its leverage as Lehman's main "clearing" bank to siphon billions of dollars of collateral just before Lehman went bankrupt on Sept. 15, 2008, triggering a global financial crisis.

Lehman's creditors charged that JPMorgan did not need the collateral and extracted a windfall at their expense.

Now, according to JPMorgan Chase, the rest of the lawsuit is settled.

Per JPMorgan Chase’s SEC filing, this final settlement resolves the following issues:

  • Lehman’s claims objection challenging JPMorgan’s disposition of securities collateral posted to JPMorgan in its roles as clearing bank for Lehman and as Lehman’s custodian for tri-party repurchase agreements
  • Lehman’s remaining claims against JPMorgan in an adversary proceeding related to certain payments claimed to be due to Lehman Brothers Special Financing Inc.
  • Lehman’s objections regarding JPMorgan’s securities lending claims and the sufficiency of documentation provided by JPMorgan for a number of other claims

In its SEC filing, JPMorgan said that it previously reserved the funds for this settlement.

JPMorgan also noted that the settlement is not final, because it still needs to be approved by the bankruptcy court.

According to JPMorgan’s SEC filing, a hearing to approve the settlement is scheduled for Feb. 16, 2017.

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