Financial giant JPMorganChase & Co. has agreed to settle a 2012 class-action lawsuit, to the tune of $75 million. As reported by Reuters, the suit stems from claims that JPMorgan mishandled 401(k) retirement funds, shifting money from stable investments into higher-risk areas, including mortgage-related assets. A representative for JPMorgan told Law360 the company is not admitting fault, but rather agreed to the settlement to avoid litigation costs.
Originally filed in April 2012, the suit accuses JPMorgan of violating its fiduciary duty under the Employee Retirement Income Security Act (ERISA). The retirement funds in question were supposed to be a safe, low-risk investment, but the plaintiffs claim JPMorgan instead bumped those funds into the riskier Intermediate Bond Fund and the Intermediate Public Bond Fund during 2009 and 2010.
Lawyers representing the investors claim their clients suffered between $410 million and $555 million in total damages, based on testimony by an expert witness. Per Law360, under the terms of the settlement the investors would be paid “based on the amount between the actual performance of their investments and the Barclays Intermediate Aggregate Index, a benchmark index.” The plaintiffs’ lawyers will also be seeking up to $25 million in fees and $1.75 million in costs, out of the $75 million total.
The settlement was arrived at via mediation and now awaits approval from U.S. District Judge Vernon Broderick. The settlement explains that:
Instead of the additional time it would take to resolve this action and the considerable risk that the result could be adverse, under the settlement, $75 million will be deposited in an interest-bearing account, which will benefit the class if the settlement is finally approved.
Todd Schneider, an attorney at Schneider Wallace Cottrell Konecky Wotkyns LLP, said in an email to Law360 that “We are pleased that we were able to bring this case to a successful conclusion on behalf of hundreds of thousands of investors.”