JPMorgan Chase Bank settled a claim by several retirement funds that it breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 for $150 million, according to the Practical Law Company.
Seven months after the U.S. District Court for the Southern District of New York held that JPMorgan did not breach a fiduciary duty of loyalty to the plaintiffs under ERISA, the parties in Board of Trustees of the AFTRA Retirement Fund v. JPMorgan Chase Bank, N.A. filed a motion for preliminary approval of a settlement of the ERISA class action.
The Board of Trustees of the AFTRA retirement funds, on behalf of the class of ERISA plan clients, argued that JPMC breached its fiduciary duty of loyalty when its securities lending service invested the assets of the ERISA plans in Sigma Finance, Inc. (SFI) while JPMC's investment banking division simultaneously extended billions of dollars of repurchase agreement financing to SFI and retained a high priority for claims in the event SFI was unwound. The threshold issue in the case was whether JPMC was performing a fiduciary function for its ERISA plan clients when it extended repurchasing financing to SFI.
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Under the settlement, JPMorgan will pay $150 million to the class and the plaintiffs and the class will dismiss their complaints and all related claims against JPMC. JPMC also will execute a similar release in favor of the class members and will dismiss and release its third-party claims against certain class members' trustees, if it receives corresponding releases from the third-party defendants.
With the court's approval, the plaintiffs' lead counsel may seek attorneys' fees, expenses and case contribution awards for the named plaintiffs. The parties proposed a final approval hearing on the settlement be held on June 4, 2012.
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