JPMorgan Attempts to Have $19 Billion Lawsuit Stemming From Madoff Scandal Thrown Out
JPMorgan Chase & Co. recently asked a judge to toss out a $19 billion lawsuit filed against it by Irving Picard, the trustee responsible for recovering funds from the Madoff investment scandal. In support of its request, JPMorgan cited to a recent ruling in which U.S. District Judge Ratner threw out a similar lawsuit seeking $9 billion from HSBC Holdings, Plc. Judge Ratner stated that Picard did not have standing to bring common law claims against HSBC.
The legal requirement of “standing” generally requires that in order for a party to bring an action against another party, they must demonstrate that they a sufficient connection to the conduct that is being complained of and have been harmed as a result of that conduct. In finding that Picard did not have standing to bring common law claims against HSBC, Judge Ratner was referring to Picard’s customer damage claims, in which he is attempting to sue parties who allegedly violated a duty to the customers of Madoff securities by failing to detect Madoff’s fraud or, alternatively, by aiding or abetting the fraud. Citing to the legal doctrine of “clean hands”, Judge Ratner stated that Picard lacks standing to bring the claims on behalf of the Madoff customers who were defrauded because he is responsible for liquidating the Madoff securities firm and he therefore cannot bring claims based upon wrongful conduct that the firm in which the firm itself participated.
Picard has disclosed that he intends to seek a total of $100 billion on behalf of former Madoff clients from banks such as JPMorgan and HSBC. Should the JPMorgan lawsuit be tossed out, it would put into question Picard’s ability to accomplish this goal.