JPMorgan Sued for Sale of High Risk, Illiquid Real Estate Investments


Billionaire Len Blavatnik filed a lawsuit against JPMorgan Chase this week, claiming that the investment bank had mismanaged a $1 billion investment account that held assets on behalf of Blavatnik’s company, Access Industries. The suit alleges that JPMorgan’s brokers invested the company’s assets in risky, illiquid real estate securities that were inconsistent with the conservative investment objectives of the company, causing $98 million in losses that would not have occurred had the money been properly invested.

Many investors who lose money due to poor account management are not aware of their legal rights. According to Craig T. Jones, an attorney with the Atlanta law firm of Page Perry, a financial advisor or broker owes a duty to recommend investments that are suitable for the objectives of the given investor. “Many investors who lose money,” says Jones, “simply chalk it up to the unpredictability of the market, but Wall Street is not Las Vegas.” Professional advisors and brokers owe at the very least a duty of suitability, and in most instances they owe an even higher fiduciary duty to act in their client’s best interests where there is a special relationship of trust and confidence. “If a broker claims he is a professional investment advisor when he solicits your business,” says attorney Jones, “he cannot claim that he is a mere order-taker once he is sued. They can’t have their cake and eat it too.”

Any investor who believes that he or she has suffered significant losses due to portfolio mismanagement should consult a lawyer who regularly handles investment fraud matters. Depending upon the circumstances and the law of the state involved, there may be a claim for unsuitability, breach of fiduciary duty, or even fraud. Page Perry is based in Atlanta but represents investors in lawsuits and arbitrations all over the country.