JPMorgan Sues American Century

September 22, 2011 ( - JPMorgan Chase & Co. has sued American Century, claiming it wasn’t informed about an $848 million optioned share sale to Canadian Imperial Bank of Commerce (CIBC).


According to Bloomberg news, a public version of the complaint filed in Delaware Chancery Court claims that American Century failed to disclose material information regarding the sale, which was completed a few weeks ago, and that the shares were not purchased at their fair market value.  The complaint was initially filed under seal, according to the report.

Earlier this summer CIBC had agreed to buy a 41% stake in American Century from JPMorgan, which had purchased a holding of about 45% in American Century for about $900 million in January 1998.  Under a 2009 option agreement between American and JPMorgan, American could purchase all of the shares JPMorgan owned in the firm and resell them to a third party.

JPMorgan said in its complaint that it learned of the share sale through a public announcement. “American Century improperly withheld information regarding the CIBC stock sale from JPMorgan’s director designee on American Century’s board,” lawyers for the bank said in the redacted complaint, according to Bloomberg.  American Century “understated its financial position” to an independent adviser, causing a report that served as the basis for the share repurchase to understate the firm’s fair market value, according to the complaint.

JPMorgan is seeking a trial to determine unspecified damages.

American Century manages approximately $111 billion in assets for a diversified mix of institutional, intermediary and retail investor clients.  CIBC holds 10.1% of American Century’s voting rights and appoints two representatives to its 10-person board.

The case is JPMorgan Chase & Co. v. American Century Companies Inc., CA6875, Delaware Chancery Court (Wilmington.)