J.P. Morgan Chase & Co. was sued Monday by the Louisiana Municipal Police Employees Retirement System, which said the bank’s $88.3 million settlement with the U.S. Treasury Department stemmed from a breach of fiduciary duty by its directors.
The complaint, filed in New York State Supreme Court in Manhattan, follows an Aug. 25 announcement that the company agreed to resolve alleged violations of international sanctions programs including Cuban assets control and anti-terrorism regulations.
The $1.3 billion Baton-Rouge based pension fund, an investor in J.P. Morgan, accused the current directors of the bank — including Chairman Jamie Dimon — of “knowingly” allowing and rewarding violations of Treasury Department programs.
“The misconduct occurred, unchecked, under the defendants’ watch because of their complicity in the improprieties alleged herein,” the pension fund said in the complaint. “Because of its acquiescence in the scheme, JPMC’s board cannot be disinterested and independent.”
The Treasury said that J.P. Morgan, through its correspondent banks, maintained prohibited financial transactions with sanctioned entities in countries including Cuba and Iran. The J.P. Morgan payment agreed upon by the Office of Foreign Assets Control involves “egregious” violations for five years, according to a Treasury Department statement.
The OFAC enforcement action covers actions from December 2005 to March 2011 involving multiple violations of sanctions programs, the Treasury Department said. The violations include processing 1,711 wire transfers totaling $178.5 million from December 2005 to March 2006 involving Cuban people and a trade loan of $2.9 million with a blocked affiliate to the Islamic Republic of Iran Shipping Lines.
The OFAC said the $88.3 million payment from J.P. Morgan is based on the bank’s cooperation, transaction review and the absence of an OFAC notice or finding of violation during the five years of the transactions.
The lawsuit seeks unspecified damages “caused by the individual defendants’ unlawful course of conduct and breaches of fiduciary duty,” including costs to the company associated with the settlement, remedial measures, damage to goodwill and “increased regulatory scrutiny.”
Jennifer Zuccarelli, a spokeswoman for J.P. Morgan, declined to comment on the lawsuit.