NEW YORK (Reuters) – A shareholder lawsuit against the merger of JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) and the crippled investment bank Bear Stearns Cos was dismissed on Thursday.
The lawsuit sought damages from JPMorgan and former directors of Bear Stearns, and asked that the federally arranged merger be set aside.
But Justice Herman Cahn of the New York State Supreme Court in Manhattan found that the Bear directors acted in good faith in agreeing to a $10-per-share takeover. He found that their efforts to “preserve some shareholder value while averting the uncertainty of a bankruptcy” were warranted.
In a 44-page ruling, the justice also found that the plaintiffs in the class-action case failed to show that JPMorgan conspired with Bear’s board or otherwise “dominated Bear Stearns’ daily operations” to such a degree that the merger became a foregone conclusion.
The plaintiffs included former Bear shareholders who contended that the $10-per-share takeover price was too low.
A lawyer for the plaintiffs and a JPMorgan representative did not immediately return calls seeking comment.
The lawsuit is one of many spurred by the demise of Bear Stearns earlier this year.
The merger was arranged by the Federal Reserve, which agreed to backstop $29 billion of losses that JPMorgan could incur from taking on Bear’s balance sheet. JPMorgan completed the purchase on May 30.
(Reporting by Jonathan Stempel; Editing by Gary Hill)