The judge's order indicated that:
"... internal JPMorgan e-mails indicate that JPMorgan not only began marketing the loan to Inbursa during this time (March 2009), but also recognized that Cablevisià ³n might object to such an assignment. " Judge Rakoff
Morgan was doing a deal behind Cablevisià ³n's back that it knew the company objected to at least, and that it should have known would harm the company. This is the very same company, Cablevisià ³n, that had given Morgan the opportunity to handle the original financing, a company owned in the majority by Televisa, which had done business with Morgan for decades.
Double dealing
Then, it turns out, "On May 8, 2009, JPMorgan and Inbursa reached a handshake agreement on the basic terms of an assignment of 90% of the loan." The deal was done, for all practical purposes.
And Morgan didn't even bother to tell Cablevisià ³n or Televisa that it had sold the loan:
"On May 21, 2009, Cablevisià ³n learned from HSBC, which had previously expressed interest in purchasing some of the loan, that the loan was no longer for sale. Televisa's Phillips immediately contacted Sotelo at JPMorgan, who denied that any sale had been effected. Later that day, JPMorgan's Lautersztain sent Phillips and others at Televisa a formal request for Cablevisià ³n's consent to the assignment." Judge Rakoff
So in the same day, Televisa was told that there was no deal and then was asked permission to approve a deal that was already done. Amazing!
Judge Rakoff described how Televisa itself offered to finance the Cablevisià ³n deal at rates equally favorable to Morgan. This was happening while, unbeknownst to Televisa and Cablevisià ³n, Morgan was structuring what the judge described as a special deal for Cablevisià ³n's competitor that allowed remarkable access to early all of it's proprietary business information and trade secrets.
Judge Rakoff noted that the Morgan "Participation Agreement was executed on July 15, JPMorgan did not disclose the participation to Cablevisià ³n."
Why did Morgan turn down a sure deal on favorable terms from Cablevisià ³n's majority owner Televisa?
Why was Morgan negotiating with Cablevisià ³n's arch competitor to do a deal that would actually harm the holder of it's loan, Cablevisià ³n?
Did Morgan anticipate a scenario where the loan holder, Banko Inbursa, demanded and received the details of Cablevisià ³n's business and handed them over to Telemex?
And how long would it take Telemex to drive Cablevisià ³n into the ground once it got just about every detail avalable on it's business, strategies, and trade secrets?
Some justice for a change
Judge Rakoff concluded, "The fact that these and other provisions were demanded by Inbursa and were not part of JPMorgan's standard participation agreement is further confirmation that this is really a disguised assignment." He then enjoined any further action on the loan by Morgan and told the lawyers from both sides that he'd see them in court soon to complete this matter.
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