(September 3, 2012) — Louisiana’s police pension fund has filed a class action suit against JP Morgan Chase in Manhattan district court, claiming that the custodial bank manipulated interest rates in foreign exchange trades to skim off millions of additional dollars from the pension fund.
“JP Morgan extracted inappropriate fees from its custodial clients, abusing its superior position and disregarding its fiduciary duties,” attorneys for the Louisiana Municipal Police Employees Retirement System (LAMPERS) argue in the complaint. “Moreover, rather than disclose the profits it earned by trading FX, JPMorgan bundled the exchange rate and its profit into the conversion ‘rate’ it provided to clients. Thus, LAMPERS…did not and could not know that JP Morgan was extracting profits from indirect FX trading nor could they determine the amount of profit JP Morgan was extracting. JP Morgan’s excess profit from FX transactions resulted in a breach of fiduciary duties, including duties of care and loyalty, to LAMPERS.”
The US Department of Justice brought a similar case again BNY Mellon in July. The lawsuit alleged the bank cheated customers on foreign exchange services, leading to ill-gotten gains of more than $1.5 billion from some of the largest institutional investors worldwide, including the Abu Dhabi Investment Authority, the Kuwait Investment Authority, and the Alaska Permanent Fund.
LAMPERS is demanding a jury trial, and is seeking recovered assets, compensation for damages, and reimbursement of its legal fees.
LAMPERS itself is on something of a litigation streak. In August, the fund filed a lawsuit against a property developer over its CEO’s pay. The $1.4 billion public plan has also previously sued JP Morgan, alleging breach of fiduciary duty over banking sanction violations in November 2011.