WaMu Asks To Examine JPMorgan For Fraud
By Brendan Pierson
Law360, New York (May 04, 2009) -- Washington Mutual Inc. has asked a
bankruptcy judge for permission to investigate whether JPMorgan Chase
& Co. deliberately depressed the value of Washington Mutual's banking
assets before they were seized by the Federal Deposit Insurance Corp.
and sold to JPMorgan in September.
In a motion filed Friday in the U.S. Bankruptcy Court for the District
of Delaware, Washington Mutual asked to conduct an investigation under
Rule 2004 of the Bankruptcy Code into allegations in a lawsuit
recently filed by Washington Mutual investors against JPMorgan
alleging that it drove down the value of Washington Mutual's banking
unit, Washington Mutual Bank, by abusing confidential information.
The investors sued JPMorgan in February in the U.S. District Court for
the Southern District of Texas. They alleged that JPMorgan engaged in
?sham negotiations? with Washington Mutual throughout 2008 about
buying WMB in order to obtain confidential information about
Washington Mutual.
JPMorgan then shared the confidential information with WMB customers
to persuade them to withdraw their deposits, leaked information to the
media to depress WMB's stock value and ultimately used it in its
negotiations with the FDIC, the complaint alleged, allowing it to
acquire WMB's assets for a ?fire sale? price. JPMorgan paid $1.9
billion for the assets.
?The complaint filed in the Texas action ... lays out a premeditated
plan by JPMC designed to damage two of [Washington Mutual]'s most
significant assets ? WMB and (subsidiary) WMB fsb ? so that JPMC could
purchase WMB's assets on the cheap, to the severe detriment of its
largest stakeholder,? Washington Mutual, the company said in Friday's
motion.
Washington Mutual said that if the allegations are true, it might be
entitled to recover some of the capital it transferred to WMB last
year, which amounts to about $6.5 billion, since the transfers could
be considered fraudulent.
An attorney for JPMorgan could not immediately be reached for comment
on Monday.
Washington Mutual is engaged in two separate adversary proceedings
with JPMorgan. It said there would likely be little overlap between
those proceedings and the proposed Rule 2004 examination.
Last week, Washington Mutual filed an adversary complaint against
JPMorgan in an effort to recover more than $4 billion in demand
deposits, which JPMorgan claims it purchased when it bought Washington
Mutual's banking assets.
Washington Mutual said it had been going through the bankruptcy
proceedings for seven months without two of its most valuable and
liquid assets, more than $4 billion in demand deposits at former
subsidiaries in Henderson, Nev., and Park City, Utah. Those deposits,
according to the adversary complaint, were owned by Washington Mutual
and are specifically held in accounts for its use.
Washington Mutual also sued the FDIC in late March in an attempt to
recover the $6.5 billion in capital contributions to WMB, along with
$4 billion in preferred securities and $3 billion in tax refunds
related to the sale of WMB's assets.
The complaint blames federal regulators for selling the failed bank
for only $1.9 billion, and claims the FDIC had no right to sell
certain property, among other things.
A few days later, JPMorgan sued WaMu seeking a declaration that it is
the rightful owner of at least $7.9 billion in disputed WaMu assets,
including $4 billion in core capital for the former WaMu banking
operations, $3.7 billion in deposit credit and $234 million in tax
benefits, as well as intellectual property, Visa shares and employee
benefit funds.
JPMorgan also intervened in the other action brought by WaMu against
the FDIC.
On Sept. 26, WaMu filed for Chapter 11 protection, citing
approximately $33 billion in total assets and $8.2 billion in debts.
Washington Mutual is represented by Elliott Greenleaf and Quinn
Emanuel Urquhart Oliver & Hedges LLP.
JPMorgan is represented by Landis Rath & Cobb LLP.
The case is In re: Washington Mutual Inc., case number 08-12229, in
the U.S. Bankruptcy Court for the District of Delaware.
--Additional reporting by Jesse Greenspan and Evan Weinber
http://www.law360.com/articles/99770 -----------
An der Börse sind 2 mal 2 niemals 4, sondern 5 minus 1.
Man muß nur die Nerven haben, das minus 1 auszuhalten.