(Reuters) – New York's Supreme Court ruled on Tuesday that JPMorgan Chase & Co. is eligible for $ 140 million in insurance coverage from a U.S. Securities and Exchange Commission settlement with former Bear Stearns Cos.
] To change a lower court's judgment, the Court of Appeal ruled 6-1 that the $ 140 million resulting from estimates of incorrect client gain and damage to investors was not a "penalty" that would excuse JPMorgan's insurance company. from providing coverage.
Bear Stearns had. agreed in 2006 to pay $ 90 million in civil fines and give up $ 160 million in undue profits to solve SEC allegations, and allowed favored hedge fund clients to conduct market timing and late trading from 1
The market era meant fast trading in crime against the rules of the funds and at the expense of ordinary investors, while late trading entailed illegal after-sales at obsolete prices.
Banks, fund companies and private individuals paid billions. ns of dollars to solve regulatory investigations into the methods, which were first brought to the attention of then-New York Attorney General Eliot Spitzer in 2003.
Bear Stearns, which JPMorgan bought in 2008, had sought $ 140 million in insurance coverage from the downgrade, excluding $ 20 million in revenue. which it had generated from the erroneous trade.
Insurance companies, including Lloyd & # 39 ;s of London, Travelers Cos. and Vigilant, said that the 140 million did not represent customer gains under the insurances and that public policy made the amount uninsured.
However, Chief Justice Janet DiFiore wrote for Tuesday's majority that insurance companies could not show that Bear Stearns could reasonably have believed that its policies excluded coverage.
She also said that unlike the fines that Bear Stearns was required to process. as a penalty for tax purposes, the 140 million earned on a "compensatory" rather than a criminal case.
A spokesman for JPMorgan said the largest US bank was happy with the decision. Lawyers for insurance companies did not immediately respond to requests for comment.