Summary
JPMorgan Chase & Co. (JPM) announced on March 16, 2005, an agreement in principle to settle a major class action lawsuit, "In re WorldCom, Inc. Securities Litigation." This litigation, brought on behalf of purchasers of WorldCom securities, was set to go to trial on March 17, 2005. The settlement, pending final documentation and court approval, requires JPM to pay $2 billion. This settlement is a significant event for investors as it resolves a substantial legal overhang. The company expects to incur a pre-tax charge of approximately $900 million ($560 million after-tax) in the first quarter of 2005 related to this settlement. While a large sum, the finality of this litigation could be viewed positively by investors as it removes uncertainty surrounding potential future liabilities.
Key Highlights
- 1JPMorgan Chase reached an agreement in principle to settle the "In re WorldCom, Inc. Securities Litigation" class action lawsuit.
- 2The settlement amount is $2 billion, pending final documentation and court approval.
- 3This lawsuit was brought on behalf of purchasers of WorldCom securities.
- 4JPMorgan Chase expects to record a pre-tax charge of approximately $900 million ($560 million after-tax) in the first quarter of 2005 for the settlement.
- 5The settlement resolves a significant legal case that was scheduled for trial on March 17, 2005.
- 6The company has attached a press release detailing the settlement announcement as an exhibit.