JPMorgan in ‘milestone’ settlement

James Giddens, the court-appointed trustee for the bankrupt brokerage, called the settlement “a milestone” in his efforts to recover money for the customers.

JPMorgan was the brokerage’s “clearing” bank, in which it acts as a go-between in Lehman dealings with other parties and, in that role, held various of its assets, court papers show.

In a filing with the US bankruptcy court in Manhattan, Mr Giddens said the accord “would substantially increase the fund of customer property” available for distribution, “without the uncertainty and delay of litigating disputed claims”.

The assets include $755m of cash and about $106m of securities, the filing said. Court approval is needed for the settlement.

“This is the biggest affirmative settlement we have had for customers” and “several thousand” of them could ultimately share in proceeds, James Kobak, a partner at Hughes, Hubbard & Reed representing the trustee, said.

JPMorgan, the second largest US bank, said the main source of the returned assets will be from funds that the bank had set aside pending a resolution with the trustee.

The settlement will have no material financial impact on JPMorgan, the New York-based bank said.

“We worked closely with the trustee and determined the assets belonged with the customer claimants,” JPMorgan spokesman Joe Evangelisti said.