Alison Frankel-

The key detail in the two securities fraud complaints filed so far against JPMorgan Chase isn’t that CEO Jamie Dimon told analysts that news reports about the bank’s risky credit default swap position were a “tempest in a teapot.” Even though that’s the statement both complaints pinpoint as best evidence so far of the bank’s alleged deception, to understand the shape this litigation is likely to take, you have to check out the class period both complaints (here and here) assert. It’s unusually short for a securities class action, beginning on April 13 — when Dimon made the fateful “tempest” comment — and ending on May 10, the day the bank disclosed losses of $2 billion in CDS trades, with more to come.

Under the rules the U.S. Supreme Court established in its 1975 opinion in Blue Chip Stamps v. Manor Drug Stores, only investors who bought or sold JPMorgan shares within that window can be part of the class suing for fraud. Shareholders who bought the bank’s stock before Dimon’s comment on April 13 are not in the suit as it’s currently framed, even if they subsequently lost millions after the May 10 disclosure. So before JPMorgan shareholders can file a suit and make a bid to be named lead plaintiff in the class action, they have to be sure they bought in that one-month window. (The law permits claims by sellers as well, but as a practical matter, it’s much harder for them to show that they suffered losses tied to the alleged fraud.)

[REUTERS ON THE CASE]

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