8-KShareholder Matters

JPMORGAN CHASE & CO 8-K Report, Shareholder Vote Results (May 26, 2010)

Filed May 26, 2010For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. (JPM) announced a significant proposed settlement related to the failure of Washington Mutual Bank in 2008. This agreement, if approved by the U.S. Bankruptcy Court, aims to resolve major disputes concerning asset ownership and rights arising from JPM's acquisition of Washington Mutual Bank's assets and liabilities from the FDIC. The settlement represents a crucial step in resolving lingering litigation and financial uncertainties associated with the acquisition. Under the terms of the proposed settlement, JPM stands to gain substantially, with an estimated recovery of approximately $6 billion from securities and tax refunds, along with valuable intellectual property and a significant stake in VISA Inc. Class B shares. While JPM assumes sponsorship of Washington Mutual's pension plan, the overall financial benefit and clarity provided by this resolution are likely to be viewed positively by investors, reducing the overhang of protracted legal battles.

Key Highlights

  • 1JPM reached a proposed settlement agreement concerning disputes from the Washington Mutual Bank failure.
  • 2The settlement is subject to approval by the U.S. Bankruptcy Court for the District of Delaware.
  • 3JPM expects to receive approximately $4 billion in securities and 80% of certain tax refunds (estimated $2 billion) from Washington Mutual, Inc. (WMI).
  • 4JPM will also acquire other disputed assets, including goodwill litigation assets, Washington Mutual's core intellectual property, and over 3 million VISA Inc. Class B shares.
  • 5WMI would receive approximately $4 billion asserted as on deposit at Washington Mutual Bank and the remaining portion of tax refunds.
  • 6The agreement includes mutual releases, with JPM retaining rights under its Purchase and Assumption Agreement with the FDIC, including indemnification.
  • 7The settlement would dismiss several adversary and related legal proceedings, but not all litigation related to Washington Mutual.

Frequently Asked Questions

This filing announces a proposed settlement agreement between JPMorgan Chase & Co. (JPM), Washington Mutual, Inc. (WMI), certain WMI creditors, and the FDIC. The settlement aims to resolve significant disputes primarily related to the ownership of certain assets and rights stemming from JPM's acquisition of Washington Mutual Bank's assets and liabilities following its failure in 2008.

If approved, JPM would receive approximately $4 billion in securities, 80% of certain tax refunds (estimated at $2 billion), Washington Mutual's core intellectual property, and over 3 million Class B shares of VISA Inc. JPM will also acquire other assets previously subject to litigation.

JPM's primary new obligation is to assume sponsorship of Washington Mutual, Inc.'s pension plan. The company will also exchange mutual releases with the other parties, while retaining its rights and indemnification claims against the FDIC under the original Purchase and Assumption Agreement.

No, the settlement resolves significant disputes and dismisses several related legal proceedings. However, the filing notes that a number of other proceedings and disputes relating to Washington Mutual will not be resolved by this agreement, including certain specific litigations and JPM's claims for indemnity from the FDIC.