JPMorgan and Chase Co. has agreed to pay a $797.5 settlement to Lehman Brothers to resolve legal issues leading up to the 2008 financial crisis. This settlement is the final payment that JPMorgan will make to Lehman for the questionable practices it exercised as Lehman’s primary creditor.
The Wall Street Journal notes that “Lawyers for Lehman said in a filing with the U.S. Bankruptcy Court in New York that the global settlement ‘finally resolves the last of [Lehman’s] disputes with J.P. Morgan, its largest secured creditor, and enables creditor distributions of nearly $800 million.’”
Details of the settlement were released to the public on Wednesday, but it still requires approval from Shelly Chapman, a U.S. bankruptcy judge based in Manhattan, according to Reuters.
While there was no actual admittance of wrongdoing, the specific allegations include the fact that JPMorgan used their position as Lehman’s clearing bank to unfairly extract collateral from Lehman before the firm went bankrupt. This left other Lehman creditors in the hole, as Lehman no longer had the means to repay the debts back.
Previous to Wednesday’s $797.5 million settlement, JPMorgan was required to pay $1.42 billion to resolve two litigation issues from Lehman. This allowed Lehman to finally pay back $1.49 billion of owed debt to creditors.
Reuters reports that “In a court filing, lawyers for Lehman said the settlement avoids the uncertainty of continued litigation and millions of dollars of additional legal fees, and is ‘in the best interests of the Lehman estate and its creditors.’”
JPMorgan is likewise pleased to have fully resolved the matter. “We are pleased to have resolved Lehman’s remaining claims and to put the matter behind us,” said J.P. Morgan spokesman Brian Marchiony,” according to WSJ.