Lehman seeks to question JPMorgan's "London Whale"

NEW YORK Fri Feb 15, 2013 9:00am IST

A Christie's employee poses for a photograph with the plaque from Lehman Brothers' European headquarters at Christie's in central London, September 24, 2010. REUTERS/Andrew Winning/Files

A Christie's employee poses for a photograph with the plaque from Lehman Brothers' European headquarters at Christie's in central London, September 24, 2010.

Credit: Reuters/Andrew Winning/Files

Related Topics

Stocks

   

NEW YORK (Reuters) - Lehman Brothers Holdings Inc is seeking court permission to question the JPMorgan Chase & Co(JPM.N) trader known as the "London Whale" in connection with its $8.6 billion lawsuit accusing the largest U.S. bank of driving it into bankruptcy.

In a late Wednesday night filing in Manhattan bankruptcy court, Lehman and a committee of its unsecured creditors said months of disclosures about the trader, Bruno Iksil, suggest that he played a "greater role" than previously thought in the events underlying the May 2010 lawsuit.

They asked U.S. Bankruptcy Judge James Peck for permission to ask French authorities to compel Iksil's testimony.

JPMorgan spokesman Joseph Evangelisti declined to comment about the request. A lawyer for Iksil did not immediately return a call seeking comment.

Iksil worked for JPMorgan in London and is no longer employed by the New York-based bank. His activities have been linked to more than $6.2 billion of trading losses at JPMorgan's chief investment office.

In the court filing, Lehman and its creditors committee said Iksil's "practice of intentional mismarking" of trades warranted an inquiry into trades he oversaw that led to an "unjustified multimillion-dollar collateral call" on September 9, 2008, six days before Lehman filed for bankruptcy protection.

Lehman and the committee also want to examine how the chief investment office managed JPMorgan's exposure to Lehman.

But they said Iksil's lawyers have indicated that he will not cooperate in the absence of an official request under international legal norms, even though JPMorgan has largely agreed to the discovery requests.

Lehman accused JPMorgan in the lawsuit of hastening its bankruptcy by using its "unparalleled" knowledge of its distress, through its role as the main clearing bank handling third-party dealings, to extract $8.6 billion of collateral in the four business days prior to the Chapter 11 filing.

Last April, Peck narrowed Lehman's lawsuit but let stand some claims, saying that protections given to "systemically important" banks such as JPMorgan did not excuse them from acting in a "commercially unreasonable" manner.

Lehman was once Wall Street's fourth-largest investment bank, and its bankruptcy remains the largest in U.S. history.

It emerged from Chapter 11 last March, and is expected to spend several years winding down. Lehman has said it hopes to repay creditors about $65 billion.

The JPMorgan case is Lehman Brothers Holdings Inc et al v. JPMorgan Chase Bank NA, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-03266. The main bankruptcy case is In re: Lehman Brothers Holdings Inc in the same court, No. 08-13555.

(Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Adani Project

Adani Project

Australia approves Adani's $16 bln Carmichael coal project  Full Article 

India-U.S. Talks

India-U.S. Talks

Kerry to woo Modi's India, but quick progress unlikely  Full Article 

Paring Debt

Paring Debt

Jaiprakash to sell hydro plants to Reliance Power  Full Article 

Nifty Falls

Nifty Falls

The broader index hits lowest in nearly a week on profit taking  Full Article 

Mideast Conflict

Mideast Conflict

U.N. Security Council calls for humanitarian ceasefire in Gaza  Full Article 

Market Eye

Market Eye

Foreign investors prefer Indian cyclicals, utilities - Macquarie  Full Article 

Debt Investment

Debt Investment

India's FII debt limit hike credit-positive, says Moody's  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage