Early victory for JP Morgan in Dexia case

City A.M. Reporter
JP MORGAN Chase has won the dismissal of nearly all of a lawsuit accusing it of misleading the Belgian-French bank Dexia SA into buying more than $1.6bn (£1.1bn) of troubled mortgage debt.

The decision, made public yesterday by US District judge Jed Rakoff in Manhattan, is a victory for the largest US bank and its chief executive, Jamie Dimon, eliminating an estimated 99 per cent of the potential damages.

Dexia’s case gained notoriety after emails and other materials were disclosed that suggested the bank and its affiliates knew the residential mortgage-backed securities they were selling were toxic, but sold them anyway.

Rakoff said he would explain the reasons for his decision “in due course.”

In a statement, JPMorgan’s law firm Cravath, Swaine & Moore said the dismissal of Dexia’s claims on all but five of the 65 RMBS certificates at issue reduced potential damages to about $5.7m from $774m.

Dexia was not immediately available for comment. A spokesman for its US law firm declined to comment immediately. JPMorgan spokeswoman Jennifer Zuccarelli declined to comment.