It looks like Captain Ahab and his merry band of JPMorgan Chase stockholders are going to get a chance to tackle the “London Whale.”

On March 31, U.S. District Judge George Daniels in Manhattan ruled that the financial institution’s shareholders can proceed with a lawsuit against JPMorgan Chase, CEO Jamie Dimon, and former CFO Douglas Brounstein over allegations that they knowingly hid risks that the Chief Investment Office (CIO) was taking in early 2012.

JPMorgan Chase lost $6.2 billion as a result of trades made linked to Bruno Iksil, who worked in a bank office in London. Iksil has been at the center of the “London Whale” scandal, which has also resulted in a Commodity Future Trading Commission probe of the bank and indictments for implicated JPMorgan Chase employees.

The shareholder lawsuit accuses the defendants of securities fraud stemming from misleading statements. According to the suit, Dimon dismissed reports of Iksil’s trades, saying that on an April 13, 2012, call that they were a “tempest in a teapot.” Shareholders also accuse Dimon and Brounstein of materially underestimating the bank’s “value at risk.”

Judge Daniels called these complaints valid in allowing the case to proceed. “The statements were material as they were made immediately after the financial news media revealed that (the) CIO had amassed a huge position in exotic derivative instruments, and defendants were attempting to reassure investors that those trades were under control,” Daniels said, via Reuters.

Daniels dismissed three other potential defendants from the case, including former CIO head Ina Drew, former CFO Mike Cavanagh (who proceeded Brounstein in the position), and former bank chief risk officer Barry Zubrow.

The case is just the latest in a long line of litigation for the financial institution, which has paid large settlements over the financial crisis, Bernie Madoff’s Ponzi scheme, and even sex discrimination and whistleblower awards. However, despite the company’s legal woes, the board of directors has shown faith in Dimon, even bumping up his pay for 2014.


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