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

Power Outage

Power Outage

India may face blackouts as coal shortage cuts power output  Full Article 

Moody's on Inflation

Moody's on Inflation

Persistent inflation hurting India's sovereign ratings - Moody's  Full Article 

Carmichael Project

Carmichael Project

Adani buys Australia coal mine royalty rights from Linc for $145 million  Full Article 

GDP Preview

GDP Preview

Economy likely grew faster in June quarter: Reuters poll.  Full Article 

India-Japan Meet

India-Japan Meet

Modi eyes breakthrough nuclear pact on Japan trip   Full Article 

Monetary Policy

Monetary Policy

BofA says RBI may cut rates by 75-100 bps starting early 2015  Full Article 

Road to IPO

Road to IPO

Mega-IPO to rekindle the 'bromance' behind Alibaba's rise  Full Article 

Automakers Haven

Automakers Haven

Tata, Volkswagen, others agree to invest $1.9 bln in India  Full Article 

Rare Earth Output

Rare Earth Output

India to chip in with 5 pct of global rare earth output  Full Article 

Reuters India Mobile

Reuters India Mobile

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