The plaintiffs also accuse JP Morgan of giving MF Global substantial assistance in converting segregated consumer assets. According to the lawsuit, at one point JP Morgan gave MF Global a $1.2 billion line of credit. The plaintiffs contend that JP Morgan should have been alarmed when MF Global couldn’t repay its loan.
Matt Edling, an attorney representing the farmers, noted that MF Global did manage to make a payment – presumably with client money taken from segregated accounts.
According to Edling, JP Morgan wrote MF Global to inquire if the money had been taken from client accounts. MF Global never responded, and JP Morgan cashed the loan repayment check.
“JP Morgan’s role wasn’t just a minimal role,” Edling said. “They were in on all MF Global’s major transactions. This was an institution that had their hands all over this. Jon Corzine might have robbed the bank, but JP Morgan and PricewaterhouseCoopers drove the getaway car.”
Although the MF Global trustee has assured clients a 72 percent asset recovery, Eding points out that it still doesn’t account for the $300 million more still missing.
In addition to Corzine, other MF Global officials targeted in the lawsuit include chief financial adviser Christine A. Serwinski; and David Simons, head of operations.
The plaintiffs in the case are seeking class-action status and are represented by the Helena law firm Anderson, Baker and Swanson and the San Francisco firm Cotchett, Pitre and McCarthy.
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