Billionaire Leonard Blavatnik’s lawyers asked a New York judge to hold JPMorgan Chase & Co. responsible for stuffing a fund with risky mortgage securities and losing 10 percent of his $1 billion investment.
Blavatnik, 55, ranked 49th on Bloomberg’s billionaires index with a net worth of $16.2 billion, sued JPMorgan in New York state court in June 2009, accusing the biggest U.S. bank by assets of putting more money into mortgage securities in his CMMF fund than investment guidelines allowed.
Richard I. Werder Jr., an attorney with Quinn Emanuel Urquhart & Sullivan LLP who is representing Blavatnik, today asked Supreme Court Justice Melvin Schweitzer to order JPMorgan to pay more than $100 million in damages to the billionaire for the losses to the fund.
“We’re talking about this account being converted into a totally different kind of account than the one it was supposed to be,” Werder said during closing arguments in a two-week, nonjury trial in Manhattan.
Attorneys for New York-based JPMorgan have argued that CMMF rejected the “most conservative strategy” it was offered in favor of one that sought a higher return than a money-market fund, with higher risk and less liquidity.
Lewis R. Clayton, an attorney with Paul Weiss Rifkind Wharton & Garrison LLP, representing JPMorgan, told Schweitzer today that the losses were the result of unexpected market conditions and that the mortgage securities purchased for the fund were “remarkably liquid” until the financial crisis hit in 2008.
“This is classic backward-looking, after-the-fact second-guessing,” Clayton said during his closing argument.
Schweitzer didn’t indicate when he planned to rule. Werder said he expected a decision within several months, while Clayton declined to comment after today’s proceedings.
The case is CMMF LLC v. J.P. Morgan Investment Management Inc., 601924-09, New York State Supreme Court (Manhattan).