The lawsuit claims that JP Morgan used its “unparalelled access” to Lehman’s distressed debt to remove £5.9bn worth of collateral in the four business days ahead of the collapse. This included a £3.4bn withdrawal on the final day.
JP Morgan was Lehman’s short-term lender before the collapse. Lehman claims the withdrawal of contributing to the collapse by demanding the withdrawal at a time when credit markets were tightening.
According to the complaint, JP Morgan was aware of Lehman’s visibility weakening and threatened to deprive Lehman of critical clearing services unless it posted the capital.
“With this financial gun at Lehman’s head, JP Morgan was able to extract extraordinarily one-sided agreements from Lehman’s literally overnight,” the complaint said.
Lehman also claimed that JP Morgan officials decided to extract the collateral after learning from meetings with Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Henry Paulson that the government was not going to rescue Lehman’s from bankruptcy.
A spokesman for JP Morgan has said the bank will defend against the lawsuit.