JPMorgan sues Berlin transport provider over derivatives contract (BLOG)

<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhlOcqIaTApegpdBUWIGPfnmMznEsvjU1mY6fp3OzESVmZUHIE2JPp_LhGIT0VENdUF9rAtFH96aVmhpI2lzWVmr4K01qHXBU15NIZ1sw40ZkmYnQ5vSIhOfioKlbueTUzmp2rn0oU2dM/s1600/2014-01-20T180521Z_1_CBREA0J1E9600_RTROPTP_3_JPMORGAN-SETTLEMENT_original.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhlOcqIaTApegpdBUWIGPfnmMznEsvjU1mY6fp3OzESVmZUHIE2JPp_LhGIT0VENdUF9rAtFH96aVmhpI2lzWVmr4K01qHXBU15NIZ1sw40ZkmYnQ5vSIhOfioKlbueTUzmp2rn0oU2dM/s1600/2014-01-20T180521Z_1_CBREA0J1E9600_RTROPTP_3_JPMORGAN-SETTLEMENT_original.jpg" width="320" /></a></div><div id="yui_3_9_1_1_1390260158023_1793" style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">By Clare Hutchison</div><div id="yui_3_9_1_1_1390260158023_1796" style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">LONDON (Reuters) - JPMorgan (<a data-rapid_p="8" href="http://finance.yahoo.com/q?s=jpm" style="color: #324fe1; display: inline-block; margin-top: -85px; padding-top: 85px; text-decoration: none;">JPM</a>) is suing Berlin's public transport provider in a British court to recover the $204 million plus interest it says it is owed over an "unfortunate" derivatives contract taken out before the financial crisis.</div><div id="yui_3_9_1_1_1390260158023_1798" style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">The lawyer for the U.S. bank said Berliner Verkehrsbetriebe (BVG) was looking for anyone other than itself to blame for the losses on the collateralized debt obligation (CDO).</div><div id="yui_3_9_1_1_1390260158023_1800" style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">"Rather than simply accepting that it had been unfortunate in the events that happened in the financial markets... BVG has decided to follow a course doing everything it could to avoid paying its debts... casting around for someone to blame other than itself," Laurence Rabinowitz told a London court on the first day of the trial.</div><div style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">Problems arose simply because the transaction occurred just when serious cracks in the world's financial system were appearing, Rabinowitz added.</div><div style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">BVG, which runs the German capital's underground railway, tram, bus and ferry networks, argues that it was misled by JPMorgan and the bank's law firm, Clifford Chance, and that it did not fully understand the risks involved. BVG is due to begin its defense on Tuesday.</div><div style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">Clifford Chance said in a statement the "claims against us are misconceived and entirely without merit."</div><div style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">The transport authority maintains that the employee most closely involved in the swap had no experience of the complex financial derivative the bank had pitched to him and misunderstood it, according to court documents.</div><div style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">CDOs are a series of assets, often high-yield junk bonds, mortgage-backed securities, credit default swaps and other products, put together by a bank and sold in tranches according to their level of risk. They were marketed to investors as investments with a defined risk and reward.</div><div style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">Following the 2008 financial crisis many investors who lost tens of millions of dollars through such investments have questioned what banks knew when they modeled such products and a number have brought legal action against the banks.</div><div style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">Industry experts have also argued that some organizations may have lacked the sophistication to understand CDOs.</div><div style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">The case comes after JPMorgan paid nearly $20 billion in 2013 to settle assorted legal claims, including the "London Whale" derivatives trading scandal.</div><div id="yui_3_9_1_1_1390260158023_1802" style="background-color: white; font-family: 'Helvetica Neue', HelveticaNeue, helvetica, arial, sans-serif; font-size: 15px; line-height: 24.000001907348633px; margin-bottom: 1.1em;">(Reporting by Clare Hutchison; Editing by Louise Heavens)</div></div>

JPMorgan sues Berlin transport provider over derivatives contract (BLOG)

By Clare Hutchison LONDON (Reuters) - JPMorgan ( JPM ) is suing Berlin's public transport provider in a British court to recover the $20...

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