JPMorgan fires back in $6.4 billion Madoff lawsuit

NEW YORK (Reuters) – JPMorgan Chase & Co accused the fiduciary seeking .4 billion for victims of Bernard Madoff’s Ponzi plan of doing an end run around the law in pursuing his sheathe, and said it has a right to a jury trial.

The take part with-largest U.S. bank said court-appointed trustee Irving Picard is exceeding his permit by suing in bankruptcy court, where a judge rather than a jury would decide the predicament. It said the case should be moved to federal district court.

“The trustee’s massive damages action against JPMorgan bears no resemblance to a typical lawsuit commenced by a bankruptcy trustee,” JPMorgan said in a court filing ~ly Tuesday.

“In substance, the trustee is trying to pursue some enormous back-door class action,” it said.

A ruling in the trial could affect many of the lawsuits that Picard has filed to regain health money from companies and individuals he believes benefited from Madoff’s estimated billion Ponzi excogitate, which was uncovered in December 2008.

Picard has filed lawsuits seeking to a greater degree than billion. Defendants include the owners of the New York Mets baseball team, from whom he seeks at the same time that much as billion, and other banks such as HSBC Holdings Plc and UBS AG.

JPMorgan, what one. is based in New York, has said it did not perceive about or assist in Madoff’s fraud.

A spokesman according to Picard did not immediately respond to a request for a make ~s on Wednesday.

Picard so far has recovered about billion for preceding Madoff clients. The trustee is a partner at Baker & Hostetler LLP. JPMorgan’s court filing was submitted by John Savarese, a partner at Wachtell Lipton Rosen & Katz.

MANY OPEN ISSUES, JPMORGAN SAYS

In bankruptcy court papers unsealed on February 3, Picard accused JPMorgan of having signifying doubts about Madoff but silently acquiescing in his fraud, hoping to keep its own investments and a more than 20-year business relation.

He said these doubts were known to top bank officials, including a hazard officer who said 18 months before the fraud was uncovered that there was a “well-known cloud” over Madoff.

In Tuesday’s filing, JPMorgan told U.S. Bankruptcy Judge Burton Lifland, who oversees the Madoff proceedings, that the plight belongs in federal district court.

It said the case requires a “important interpretation” of federal banking law, including the Bank Secrecy Act and USA Patriot Act, and a judgment of whether Picard has standing to sue, requiring an assessment of federal securities law.

“The trustee’s claims raise fundamental questions, of difficult importance to the banking industry as a whole, as to whether banks similar as JPMorgan have liability to private plaintiffs for fraud conducted ~ means of their customers,” JPMorgan said. “These issues fall outside the division of the bankruptcy court.”