To add to JP Morgan’s recent troubles, two of its shareholders have now filed lawsuits against the company as a result of its recent $2 billion trading blunder.
The lawsuits were filed today in New York and claim JPMorgan misled investors by changing its risk model without notice, and that the shift led to the publicized losses.
“What the Company did not reveal was that those losses were the result of a marked shift in the company’s allowable risk model, undisclosed to investors, and the conversion of a unit within the company that was touted as providing a conservative risk-reduction function into a risky, short-term trading enterprise,” says one of the complaints.
The company disclosed the trading loss last week, saying it resulted from a failed hedging strategy.
California shareholder James Baker filed one suit, charging the company with breach of fiduciary duty, waste of corporate assets and unjust enrichment.
The second was filed by Saratoga Advantage Trust’s financial services portfolio, who claimed Dimon and Braunstein made “materially false and misleading statements and omissions” during an conference call with investors.
On Wednesday, JPMorgan shares were down another 0.4% at $36.10 in midday trade.
Additionally, the FBI has officially launched a preliminary investigation of JPMorgan. FBI Director Robert Mueller gave the first on-the-record confirmation of the probe today.