JP Morgan settles most of Lehman claim for $1.42bn

http://www.bbc.co.uk/news/business-35412817

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US banking giant JP Morgan Chase will pay $1.42bn (£990m) to settle most of the legal claims accusing it of draining Lehman Brothers of cash at the time of the 2008 financial crash.

Lehman Brothers was one of the few major institutions that collapsed without a bailout during the meltdown.

JP Morgan was Lehman's main short-term lender before its collapse.

It was accused of contributing to the failure by demanding $8.6bn of collateral as credit markets tightened.

JP Morgan will also pay the insurer Ambac $995m in settlement of a case involving the sale of mortgage-backed securities.

JP Morgan says the payouts will not "have a material" effect on its earnings.

In a filing to the US Securities and Exchange Commission JP Morgan also said the settlement with what remains of Lehman Brothers resolved among other things actions brought by Lehman for the return of $7.9bn in collateral and billions of dollars in damages.

It also resolved the recovery of about $2.4bn related to Lehman's claims against JP Morgan involving derivatives transactions between the two firms after Lehman's bankruptcy.

The Lehman settlement still needs to be approved by the Bankruptcy Court.