Over the river and through the woods, to grandmother’s house Jamie Dimon goes — to recklessly hawk complex derivatives to an elderly scion of an oil fortune, that is.
That’s how one Tulsa judge saw it yesterday when she ordered Dimon’s JPMorgan Chase to cough up $18.1 million in damages to the trust fund of a 75-year-old Okie.
Bank One, which merged with JPM in 2004, sold the grandmother, Ann Fletcher, variable prepaid forwards, a hard-to-parse security, which she claims she didn’t understand.
At the time, Dimon was CEO of Bank One.
Judge Linda Morrissey blasted JPM, saying that the financial institution’s behavior “overwhelmingly demonstrates the bank’s grossly negligent and reckless administration of the trust.”
A lawyer for the trust told the judge Fletcher thought the bankers were her friends.
Bank officials breached fiduciary investing rules by purchasing derivative investments that were unsuitable for the elderly investor, the judge ruled.
Representatives of the bank said that they disagreed with the ruling and would consider appealing.
On the same day, the outspoken Dimon said in a Washington, DC, speech that JPM’s acquisition of the hobbled Bear Stearns at the request of Uncle Sam had cost it as much as $10 billion.
“We were asked to buy Bear Stearns,” Dimon said. “We did them [the government] a favor.”
Dimon implored attendees not to forget that point during an appearance at the Council of Foreign Relations.
Dimon’s comments come a week after New York Attorney General Eric Schneiderman sued JPM for fraud committed within Bear Stearns’ mortgage-origination platform.
Dimon said that he’s not sure his board would approve a Bear Stearns-type transaction today.
Meanwhile, WSJ.com reported that JPM CFO Douglas Braunstein is expected to step down.