Investors in WaMu probe JP Morgan

SHAREHOLDERS of bankrupt Washington Mutual asked a federal judge for permission to investigate JPMorgan Chase for its role in the failure of Washington Mutual Bank, according to court documents filed yesterday.

The equity committee wants information that could lead to potential claims against JPMorgan if they can show that the investment bank had a role in the bank’s failure, the largest in US history.

Washington Mutual Bank was seized in September 2008 during a bank run at the height of the financial panic. The Federal Deposit Insurance Corp sold the bank immediately after it was seized to JPMorgan for $1.9bn.

The shareholders are seeking to pick up where Washington Mutual left off. The holding company was locked in a battle for documents and depositions from JPMorgan when it reached a settlement now at the heart of the company’s proposed reorganisation.

The proposed plan leaves nothing for shareholders and distributes around $7bn to creditors. It also provides a range of liability releases.