Blavatnik to sue JP Morgan over $98m loss on toxic debt

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Len Blavatnik, the Russian-born billionaire who last week pulled out of a rescue deal for Setanta, is embroiled in a bitter battle with his company's US investment adviser, JP Morgan Chase, which he says lost him $98m on toxic mortgage assets.

Mr Blavatnik's privately-held conglomerate Access Industries entrusted $1bn to JPMorgan's asset management arm, only to find the account plunging in value when the housing market downturn turned into a full-blown credit crisis in 2007.

Access said yesterday it was filing a lawsuit in a US court to recoup the losses and get damages from the banking giant. JP Morgan told Mr Blavatnik its managers ran his money according to a carefully negotiated agreement, and that the billionaire was sophisticated enough to know he couldn't expect above-average returns without above-average risks.

"We will vigorously defend this lawsuit," a JPMorgan spokeswoman said yesterday.

Access Industries claims that the $1bn pot ended up being disproportionately invested in risky sub-prime mortgage derivatives, when the original agreement stipulated no one type of asset should make up more than one-fifth of the account. JPMorgan says Access brought that on itself by taking money out of the account, forcing it to sell more liquid credit instruments.