J.P. Morgan Chase and Goldman Sachs Group (GS) units were sued by two pension funds over claims they made misleading statements about the exposure of MF Global Holdings securities to European sovereign debt.
The complaint, filed Nov. 18 in U.S. District Court in New York, was filed by the $143 million Plumbers & Pipefitters’ Local 562 Pension Fund, St. Louis, and the $7.5 million IBEW Local 90 Pension Fund, Wallingford, Conn. The pension funds seek to represent other shareholders in a class-action lawsuit.
As a result of the misstatements, MF Global’s stock traded at “artificially inflated prices,” the pension funds said in the complaint. “While the extent of MF Global’s exposure to European sovereign debt was concealed, the defendants were able to raise some $900 million in the offerings,” according to the complaint.
MF Global Holdings, which was run by former Goldman Sachs co-CEO Jon Corzine, filed for Chapter 11 bankruptcy protection on Oct. 31 after making bets on sovereign debt and getting margin calls. The company listed debt of $39.7 billion and assets of $41 billion in Chapter 11 papers. Its broker-dealer is being liquidated separately.
Other companies named as defendants in the complaint were Bank of America’s Merrill Lynch unit, Citigroup Global Markets, Deutsche Bank Securities, RBS Securities and Jefferies & Co. Mr. Corzine and MF Global officers were also named as defendants.
David Wells, a spokesman for Goldman Sachs, declined to comment. Shirley Norton, a spokeswoman for Bank of America, and Joseph Evangelisti, a spokesman for J.P. Morgan, didn’t immediately return calls seeking comment on the lawsuit.