Swedish fund AP7, along with five US public schemes, has been named lead plaintiff in a U.S. class action lawsuit against JP Morgan Chase over losses allegedly caused by the bank's chief investment office and trader Bruno Iksil, also known as the 'London Whale'.

The pension funds allegedly lost $52m because of the fraudulent activities by JP Morgan's London chief investment office.

This week a U.S. district court judge ruled that claims against JP Morgan should be consolidated into a class action. According to Bloomberg he named the Arkansas Teacher Retirement System, Ohio Public Employee Retirement System, School Employees Retirement System of Ohio, State Teachers Retirement System of Ohio, Oregon Public Employee Retirement Fund and Sweden's AP7 as lead plaintiffs in the proceedings.

According to Bloomberg, Gerald Silk, a lawyer with Bernstein Litowitz Berger & Grossmann LLP representing the funds, said in court papers: "The public pension funds, a group which includes some of the largest public pension funds in the world, have far and away the 'largest financial interest' in the relief sought by the class in these cases."

The controversy initially erupted in May when JP Morgan Chase held a conference call revealing the losses at its investment office. This announcement came just weeks after Dimon had dismissed reports about the dangerous conduct of one the bank's traders. Due to the extraordinary large credit derivatives that Iksil amassed he became known as the London Whale.

In July, JP Morgan's chief executive officer Jamie Dimon said the firm itself had lost $5.8bn due to the trading scandal. In the worst-case scenario this figure may increase by a further $1.7bn, sources say.

Earlier this month JP Morgan's board picked the ex-chief executive of Exxon Mobil, Lee Raymond, as the man to chair the investigation into the bank's trading losses.

First published 22.08.2012

azeevalkink@wilmington.co.uk