In re JPMorgan Chase & Co. Securities Litigation

A group of shareholders (collectively, the shareholders) (plaintiffs) filed a class-action lawsuit against JPMorgan Chase & Co. (JPMorgan) (defendant) in relation to the 2004 merger between JPMorgan and Bank One. The shareholders argued that JPMorgan failed to disclose an arrangement between the CEOs of JPMorgan and Bank One before soliciting votes from the shareholders about the merger and that this relationship harmed JPMorgan’s shareholders. The shareholders based their lawsuit on allegations published in the New York Times and other newspapers but were unable to independently corroborate those allegations. The shareholders and JPMorgan attempted to settle the case. Under the proposed settlement, JPMorgan agreed to a series of governance reforms to ensure truthful and transparent communication between JPMorgan and its shareholders. Also, under the proposed settlement, JPMorgan’s board of directors could alter or terminate the reforms as it saw fit. The proposed settlement did not include any monetary damages for the shareholders. Experts for the parties believed that the reforms in the proposed settlement could benefit the parties by shaping a better corporate-management team and increasing shareholder value. An objector in the case argued that the purported value of the reforms was unknown and could be nonexistent, because JPMorgan’s board of directors could change or terminate the reforms without consulting the shareholders. The shareholders filed a motion asking the United States District Court for the Northern District of Illinois to approve the proposed settlement.