JPMorgan Chase & Co. (NYSE:JPM) has successfully settled a shale-rights lawsuit filed by owners of mineral-rights in Texas. In a charge made against the bank, beneficiaries of South Texas Syndicate Trust claimed that JPMorgan Chase & Co. (NYSE:JPM) sought to cheat them out of a compensation amounting to $681 million by entering into favorable deals with Hunt Oil Company and Petrohawk Energy Corporation, two of the bank’s commercial banking clients. The trust beneficiaries alleged that the bank offered the two energy companies with cut-rate prices of the trust’s rights in Eagle Ford, a shale formation covering central and southwest Texas.
The trial has been set to start on Friday, but the lawyers asked District Judge Larry Noll of Bexar County for a four day period to try to make a settlement. The trust has about 279 beneficiaries, with more than half of them as plaintiffs. Complicating the process of negotiations is the fact that most of these beneficiaries are scattered throughout the country. JPMorgan Chase & Co. (NYSE:JPM) averred that the beneficiaries’ complaints were based on the benefit of hindsight, noting that when the agreements were signed back in 2008 and 2009, nobody knew that the Eagle Ford will produce so much wealth.
An amount of $40 million will be handed by the bank to beneficiaries of the South Texas Syndicate Trust, in a settlement that was concluded on the third day of hearing at the Bexar County jury trial that was originally expected to last as long as six weeks. The two parties to the trial did not elaborate on the terms of the agreement. Spokesman Greg Hassel of JPMorgan Chase & Co. (NYSE:JPM) noted that both sides are happy to have reached the settlement.
In a phone interview with Bloomberg, Dan Sciano, a lawyer representing the trust beneficiaries, said that “the case was resolved with some conditions”, and that he was hoping that the agreement will be ratified by a sufficient number from the trust beneficiaries in their annual meeting this weekend.
This article has been written by Nonito Guntan.