Court orders SEC whistleblower evidence on JP Morgan Hedge Fund fraud released [TERI BUHL]
July 7, 2012 Leave a comment
I’m on RT’s top financial show, Keiser Report, today talking about JP Morgan and the cascade of fraud the bank keeps trying to cover up. We learned last week Jamie Dimon had model the bank’s whale trade loss at a possible $9 billion but didn’t mention this when congress asked him to come in for an explainer on how he massively screwed up the bank’s risk management. JPM’s shareholders aren’t getting a lot of transparency from the bank’s leadership and I’ve learned there is another little problem coming to forefront.
A Connecticut state court judge has ordered whistleblower documents and internal emails sent to the SEC last year turned over to UBS who’s suing a JP Morgan owned hedge fund. According to a suit filed by ex-JPM’er Kevin Dillon the secret documentsallegedly show JP Morgan’s back office trading administration worked with a Hedge Fund, Texas-based Highland Capital, to manipulate the net asset value of their fund’s assets. Court filings claim this was all done to get the Swiss banking giant, UBS, to lend them more money when they were in a performance death spiral and not let on to their investors that trouble was brewing in an effort to starve off redemptions.
The UBS lawsuit shows a complicated financial restructuring of a mega-million security by JPM’s staff to cover up the assets that likely should have failed sooner than they did. There are allegations of amping up the NAV to attract more investor money until the financial crisis whipped them into a tail spin they couldn’t recover from. Until a low-level internal whistleblower started gathering docs and complaining to his superiors we might have never known how deep the alleged deception was. Dillon was fired, sued, got some cash from JP Morgan in a private settlement but now UBS plans to reopen the wound and not let JP Morgan hide their bad behavior.