In an opinion today, Judge Daniels denied JP Morgan’s motion to dismiss a shareholder class action arising from its multibillion dollar losses from trades made by the “London Whale.” In an April 2012 conference call, CEO Jaime Dimon described the matter as a “tempest in a teapot,” and CFO Douglas Braunstein said he was “comfortable” with the bank’s position. The bank argued that the complaint failed to adequately allege that those statements were inconsistent with what the executives were told at the time:
[T]he oft-quoted statements by Braunstein and Dimon, respectively, during the April 13 earnings call—that JPMorgan was “comfortable” with the positions and that the press reports were a “tempest in a teapot”—were entirely consistent with what Dimon and Braunstein had been told about the London traders’ positions. The very documents on which the Complaint relies show that before the earnings call, Dimon and Braunstein were repeatedly assured by CIO personnel in London and others that the London portfolio was “balanced” and “manageable,” that the losses then incurred would “mean revert” and that potential future losses were a fraction of what they turned out to be.
Judge Daniels disagreed: