Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Monday, November 17, 2014

JP Morgan Resolves Trustee Dispute

Oil

JP Morgan Case & Co. settled a lawsuit by Texas mineral rights owners who accused the company of cutting deals with oil company clients to cheat them out of $691 million in compensation.  The dispute centered around payments for rights to drill in Eagle Ford, a shale formation underlying central and southwest Texas that has helped put the U.S. in competition with Saudi Arabia and Russia for title of the world’s largest oil producer. 

Beneficiaries of the South Texas Syndicate Trust accused the bank (who were supposedly working on their behalf) of instead concocting advantageous deals with commercial-banking clients Petrohawk Energy Corp. and Hunt Oil Co. for cut-rate prices on the trust’s rights in Eagle Ford. 

“The case was resolved with some conditions, and the jury was excused,” a lawyer for the trust beneficiaries said.  “[A] sufficient number of beneficiaries will sign the accord at their annual meeting in San Antonio this weekend.”  Although an agreement was reached without disclosing the terms, the beneficiaries would receive $40 million from the bank. 

JP Morgan denied claims of “self-dealing,” claiming the plaintiffs’ allegations were based on the benefit of hindsight.  “A trustee’s dueties and responsibilities are not to be judged by hindsight.  There’s not Monday-morning quarterbacking.”

See Margaret Cronin Fisk and Laurel Brubaker Calkins, JPMorgan Settles Claims It Cheated Shale-Rights Owners, Bloomberg Businessweek, Nov. 16, 2014. 

https://lawprofessors.typepad.com/trusts_estates_prof/2014/11/jp-morgan-resolves-trustee-dispute.html

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