Christ Church Cathedral, Indianapolis, is suing J.P. Morgan Chase & Co. in federal court, claiming two cathedral trusts lost a total of $13 million from investments managed by the firm from 2004 through 2013, court documents show.
The lawsuit, filed Wednesday in U.S. District Court in Indianapolis, states J.P. Morgan Chase lost money because, as lone trustee for the trusts, the firm purchased more than 177 different investment products, “mostly from itself, using church funds because they produced the highest revenues to J.P. Morgan, to the detriment of Christ Church.”
“J.P. Morgan, as trustee, used millions of dollars of church funds to purchase from itself clearly unsuitable investments for the church including private equity funds, structured notes, hedge funds and other proprietary funds, many of which had no track record of success.”
From late 2007 to the end of 2008, the losses brought down the trusts' assets to $27 million from about $39 million. The trusts had a combined $32 million as of Dec. 31, 2013. J.P. Morgan no longer is trustee for the two funds.
The church's complaint says J.P. Morgan violated Securities and Exchange Commission rules and breached its fiduciary duty to the trusts. It also claims J.P. Morgan received kickbacks from companies in which it invested church funds without disclosing the payments.
J.P. Morgan has no comment on the lawsuit, said Kristen Chambers, company spokeswoman.