JPMorgan Chase Sued By Libya’s Sovereign Wealth Fund

The sovereign wealth fund of Libya has filed a suit in a London court against JPMorgan Chase. This was disclosed by a Libyan Investment Authority spokesperson. Details of the suit were not revealed. In the past the sovereign wealth fund has filed suits in London against other investment banks and this has been in relation to trades that were conducted during the reign of Libya’s former leader Muammar Gaddafi.

Two years ago Libyan Investment Authority lost a lawsuit it had filed against Goldman Sachs following a trial that took seven weeks. The case revolved around 9 equity derivative trades. In May last year however Societe Generale reached an agreement to pay approximately $1.2 billion in order to settle an ongoing dispute.

Reporting season

This coincides with a reporting season for banks with JPMorgan Chase expected to announce its results on Friday. According to analysts profits at JPMorgan Chase are expected to increase by 40%. Part of the reason for the increase in profits is the fact that markets have been highly volatility and during such periods trading activity tends to go up. Investors are expected to be on the lookout for indications over whether the recent turmoil in the market poses a threat. The chief executive officer of JPMorgan Chase, Jamie Dimon, has already warning Washington’s political leaders adding that the United States should not retreat from engaging with the rest of the globe.

In an annual shareholder letter the CEO of JPMorgan Chase also pointed out that the biggest risk to the United States economy was for wages and inflation to increase at an unanticipated rate leading to the hiking of interest rates.

“We have to deal with the possibility that at one point, the Federal Reserve and other central banks may have to take more drastic action than they currently anticipate … [interest rates] may go higher and faster than people expect,” wrote Dimon in the shareholder letter.

Passive funds

Another cause of concern for Dimon is the large amounts of money that have been put in passive funds including ETFs and index funds. According to Dimon these funds are easy to liquidate and thus there would be problem if investors decided to get out their money in large numbers.

Cyberattacks on the financial institutions in the United States as well as other key pieces of the infrastructure also constituted another risk for the JPMorgan Chase chief. Dimon was however optimistic that the tax cuts and deregulation efforts were good for the U.S. economy.

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