A unit of JPMorgan Chase and Co. quietly paid a whopping $373 million arbitration award to the Kansas City-based American Century Investment family of funds last August -- thought to be the largest legal award in Missouri history -- to settle a dispute that flared into litigation in 2009, but had been kept confidential until last night. The dispute focused on a unit led at the time by J.E. ("Jes") Staley, who is now CEO of JPM's investment banking division.
The arbitrators concluded that JPM (had calculatedly breached a 2003 contract under which it had purchased American Century's Retirement Plan Services division, which packages 401(k) plans for employers, in exchange for its commitment to sell and promote American Century investment funds as 401(k) products in those plans. In fact, the panel found, JPM promoted its own fund products to the detriment of American Century's, and began planning to do so almost as soon as the contract was signed.
"JPM breached the contract over and over again," the arbitrators wrote. "The email strings evidencing the breaches...are voluminous and consistent, and can lead to no other rational finding or conclusion."
JPM had argued to the panel, unsuccessfully, that there were mainly just two ACI fund products that were possibly disadvantaged in any way, and JPM claimed that certain ACI funds had not been performing as well available alternatives…..
Find out more at http://finance.fortune.cnn.com/2012/03/22/jpmorgan-paid-373-million-arbitration-award/?iid=SF_F_LN
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