A state appeals court threw out JPMorgan’s lawsuit against its insurers on Tuesday, saying the bank’s insurers were not required to cover the $250 million settlement paid to the Securities and Exchange Commission (SEC).
The money was a combination of $160 million in disgorgement and $90 million in civil penalties Bear Stearns owed the SEC for the facilitation of late trading and deceptive market timing. The brokerage did this for preferred customers—mostly hedge funds—between 1999 and 2003. JPMorgan acquired Bear Stearns in 2008, after a collapse related to the subprime mortgage crisis.
The appeals court denied JPMorgan’s request that the settlement money be paid by the bank’s insurers (which include Vigilant Insurance Co., Liberty Mutual and Travelers, among others), saying that the bank’s policy did not cover any losses that resulted from "any deliberate, dishonest, fraudulent or criminal act or omission," wrote Justice Richard Andrias.
Read more at Thomson Reuters