Lehman Sues J.P. Morgan in Bankruptcy

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Bankrupt investment bank Lehman Brothers has sued JPMorgan Chase & Co. alleging that J.P. Morgan illegally obtained billions of dollars from it in the days prior to their bankruptcy filing. J.P. Morgan was Lehman’s one time ‘clearing bank’ or middleman between Lehman and its investors and creditors. This, according to Lehman, allowed J.P. Morgan to be privy to the financial condition of Lehman, especially when it continued to weaken. Lehman further alleged that J.P. Morgan’s Chief Executive James Dimon and other top executives took advantage of this insider information to get Lehman to turn over $8.6 billion in collateral in September 2008, an act that significantly contributed to its lack of liquidity and its subsequent downfall.

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