NEW YORK--(BUSINESS WIRE)--The judge who last week ordered JPMorgan to pay Len Blavatnik $53 million has increased the award to an amount that Mr. Blavatnik’s lawyers expect will be at least $63 million. The judge raised the amount by increasing the interest rate on the damages award to 9% from 5%.
“We were very fortunate here to have a client who had the courage of his convictions and the staying power to pursue this case to a conclusion that decisively holds JPMorgan liable for breaching the clear terms of his contract.”
The higher interest rate in New York Supreme Court Justice Melvin L. Schweitzer’s August 27 amendment of his earlier order is the correct one required under New York law for a breach-of-contract claim.
On August 21, the court awarded Mr. Blavatnik $42.5 million before pre-judgment interest, or $53 million with pre-judgment interest, stating that JPMorgan had breached its contract with him.
In his lawsuit, Mr. Blavatnik alleged that JPMorgan allocated a large portion of Mr. Blavatnik’s funds to risky subprime mortgage securities, violating a set of detailed investment guidelines that the bank agreed to.
“The guidelines were clear,” Mr. Blavatnik said. “The account had to be liquid and it had to be low-risk. The targeted returns were similar to a typical money market fund.”
In spring 2006, once the guidelines were agreed to and documents were signed, Mr. Blavatnik’s company transferred about $1 billion into JPMorgan, with clear instructions that the funds had to be invested consistent with the agreed-upon guidelines. However, JPMorgan allocated a large portion of the funds to risky subprime mortgage securities—far exceeding the limit on mortgage securities set by the guidelines. This directly resulted in losses that would have been avoided if JPMorgan had abided by the contract.
Mr. Blavatnik stated, “I hope that this decision sends a clear message to JPMorgan that they have to honor their obligations to their clients. There are a lot of people out there who, I understand, feel they have been wronged by JPMorgan but cannot afford to take on a huge bank. They shouldn’t have to. JPMorgan should do the right thing because it is the right thing to do.”
He continued, “I am gratified that the Court recognized that JPMorgan blatantly violated our agreement by loading up the account with risky subprime mortgage securities, and that the bank’s violation of its crystal clear obligations caused huge losses. To add insult to injury, JPMorgan refused to acknowledge its wrongdoing. On top of that, once we sued JPMorgan, the bank and its lawyers violated the rules requiring them to produce information that would allow us to prove their wrongdoing, for which they were sanctioned.”
Rick Werder, a partner at Quinn Emanuel Urquhart & Sullivan and lead attorney on the case, said, “We were very fortunate here to have a client who had the courage of his convictions and the staying power to pursue this case to a conclusion that decisively holds JPMorgan liable for breaching the clear terms of his contract.”