In a move that will close a case in New York federal court, Pennsylvania's Erie School District has decided not amend its complaint against JPMorgan that accused the company of charging more than $1 million in excess fees on a swaps transaction, according to a letter from the district's attorney filed yesterday.
Judge Loretta A. Preska of the Southern District of New York last month dismissed the Erie district's initial complaint, but gave the school board time to amend it, according to a transcript of a hearing released last week. The school board could not assert a securities fraud claim because the fixed-to-floating rate swap did not meet the definition of a "security-based swap agreement," the judge said.
The decision should also resolve a similar federal case the school district filed against JPMorgan in the western district of Pennsylvania. However, Erie's case against financial adviser Investment Management Advisory Group Inc., which was not named in the New York complaint, will remain open.
The complaint alleged that JPMorgan encouraged the school district to hire IMAG as the independent adviser on a 2003 swaption transaction. In return, IMAG overlooked the excessive fees JPMorgan charged, the complaint said.