Pension funds' suit: J.P. Morgan's chief investment office became a prop-trading desk

JP Morgan Chase sign

J.P. Morgan Chase turned its chief investment office into a proprietary-trading unit that caused more than $6.2 billion in losses, pension funds said in a revised complaint in their lawsuit against the bank.

J.P. Morgan represented that the unit's primary role was managing risk when, in fact, it was engaging in trades to generate profit for the bank, the funds said in an amended complaint filed Tuesday in U.S. District Court in New York.

The lead plaintiffs in the complaint, filed on behalf of bank shareholders, include the $11.6 billion Arkansas Teacher Retirement System, Little Rock, and the $76.4 billion Ohio Public Employees Retirement System, Columbus.

Jamie Dimon, J.P. Morgan CEO, “secretly transformed the CIO from a risk management unit into a proprietary trading desk whose principal purpose was to engage in speculative, high-risk bets designed to generate profits,” the plaintiffs said.

U.S. District Court Judge George Daniels ruled in August that lawsuits against J.P. Morgan should be consolidated into a class action. The pension funds allege that they incurred losses in their holdings because of trades by the chief investment office and Bruno Iksil, known as “the London Whale.”

Joe Evangelisti, a spokesman for J.P. Morgan, wasn't immediately available to comment on the filing.