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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

SAMUEL I. HYLAND, individually and on behalf of all others similarly situated, Plaintiff, v. J.P. MORGAN SECURITIES, INC., a Delaware corporation, Defendant.

Civil Action No. _______________

CLASS ACTION

JURY TRIAL DEMANDED

CLASS ACTION COMPLAINT FOR VIOLATIONS OF FEDERAL SECURITIES LAWS; CIVIL CONSPIRACY; AND AIDING AND ABETTING BREACH OF FIDUCIARY DUTY

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TABLE OF CONTENTS NATURE OF ACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 OVERVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION AND VENUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 THE PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 RELEVANT NON-PARTY ENTITIES AND PERSONS. . . . . . . . . . . . . . . . . . . . . . . . . 5

CLASS ACTION ALLEGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 SUBSTANTIVE ALLEGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 SCIENTER ALLEGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 LOSS CAUSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

PLAINTIFF'S INVESTIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 NO SAFE HARBOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

COUNT I SECTION 10(b) AND RULE 10b-5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

COUNT II AIDING AND ABETTING BREACH OF FIDUCIARY DUTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

COUNT III CIVIL CONSPIRACY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

PRAYER FOR RELIEF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 JURY TRIAL DEMAND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

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Plaintiff Samuel I. Hyland ("Plaintiff"), individually and on behalf of all others similarly situated, through counsel, alleges the following upon personal knowledge as to himself and as to all other matters upon information and belief based upon, inter alia, the investigation made by counsel, as detailed in paragraphs 197 through 199 below: NATURE OF ACTION 1. This seller class action is brought against defendant J.P. Morgan

Securities, Inc. ("JPMSI" or the "Defendant") in connection with the Defendant's participation in an unlawful entrenchment scheme, including its creation of materially false, incomplete and misleading statements regarding the merger (the "Merger") of Bank One Corporation ("Bank One") into the Defendant's parent corporation, JPMorgan Chase & Co. ("JPMC" or the "Company"). 2. The class seeks to pursue remedies under the Securities Exchange Act of

1934 (the "Exchange Act") and for violations of common law. OVERVIEW 3. By late 2003, JPMC's performance, stock price, and reputation had

deteriorated for years under the stewardship of William B. Harrison, Jr. ("Harrison"), the Company's Chairman and then-Chief Executive Officer ("CEO"). 4. Following years of mismanagement characterized by disastrous

transactions, increasingly-vocal shareholder discontent and widespread public reports of Harrison's imminent ouster, Harrison recognized that his lucrative and powerful position was in jeopardy as 2004 approached. 5. By contrast, Bank One's CEO and Chairman, the widely-lauded Jamie

Dimon ("Dimon"), was credited with turning around Bank One's profitability and reputation during his four-year tenure.

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6.

Unwilling to yield the riches and power of his position, and desperate to

shape a graceful conclusion to his career, Harrison pursued a business combination between JPMC and Bank One. 7. In a stunning betrayal of shareholder trust, Harrison rejected the

opportunity to merge with Bank One without any acquisition premium at all. 8. According to persons close to the secretive negotiations surrounding the

Merger, Harrison rejected such a merger of equals for no other reason than because Dimon sought to be CEO of the combined entity immediately. 9. Instead, Harrison agreed to an exchange ratio providing for a massive

premium over Bank One's market value ­ solely so he could retain his CEO position for two more years ­ then conspired with JPMC's wholly-owned (and fatally conflicted) financial advisor, defendant JPMSI, to conceal the nil-premium offer and to sell the high premium deal to JPMC's unsuspecting shareholders. 10. After the Merger received shareholder approval, an independent

investigation conducted by the New York Times revealed that: During the negotiations with Mr. Dimon, [Harrison] fought hard to give himself the two extra years, to secure a smooth transition, although he may have cost J.P. Morgan shareholders extra money in doing so. Mr. Dimon, always the tough deal maker, offered to do the deal for no premium if he could become chief executive immediately, according to two people close to the deal. When Mr. Harrison resisted, Mr. Dimon insisted on a premium, which Mr. Harrison was able to push down to 14 percent. The two men declined to comment on the specifics of their negotiations. [Emphasis added.] 11. To put this revelation into perspective, another reputable media source

quoted one observer's view after the Merger was announced: "If JP Morgan announced

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that Harrison was resigning and they had hired Jamie Dimon as the new CEO, the [JPMC] stock would have been up a few bucks." 12. Thus, for the sole purpose of keeping his CEO title for another two years,

Harrison caused JPMC shareholders to lose a multi-billion-dollar opportunity to combine with Bank One without unfairly harming JPMC shareholders' equity stake. 13. However, Harrison's audacious entrenchment scheme could not be carried

out alone. Without the participation of the Wall Street advisors whose blessing was necessary to assure JPMC shareholders, the scheme would not have succeeded. 14. In a highly irregular and telling move, Harrison selected JPMSI as the

financial advisor for JPMC in the Merger. 15. JPMSI played a critical role in the scheme and violated federal securities

laws by authoring and endorsing a misleading fairness opinion for inclusion in the Joint Proxy Statement-Prospectus, dated April 19, 2004 (the "Proxy/Prospectus"), which was disseminated to gain shareholder approval of the Merger. 16. JPMSI extensively participated in the creation of the Proxy/Prospectus,

which falsely characterized the nature of the Merger negotiations and omitted the critical fact that Harrison was offered but had rejected the opportunity to merge Bank One into JPMC using a nil-premium exchange ratio. 17. As a result, JPMC investors were induced to believe that Harrison had

bargained on their behalf to maximize their interest in the combined Company. In fact, Harrison had sold JPMC investors "down the river...just to save his own skin," as one observer put it.

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18.

Unaware of the entrenchment scheme, and due to materially false and

misleading written and oral statements as well as the failure to disclose material facts in the Proxy/Prospectus, shareholders of JPMC and Bank One approved the Merger, which was completed on July 1, 2004. 19. Harrison and the other JPMC directors breached the fiduciary duties of

loyalty and disclosure they owed to JPMC's shareholders by agreeing to an unfair exchange ratio in the Merger merely to entrench Harrison in the CEO office. Despite its participation in the Merger negotiations and resultant knowledge of Harrison's rejection of the zero premium opportunity, JPMSI nevertheless aided and abetted the aforesaid breaches by creating the illusion of fairness and recommending the Merger. 20. Plaintiff asserts claims under Section 10(b) of the Exchange Act [15

U.S.C. §§ 78j(b)], Rule 10b-5 promulgated thereunder [17 C.F.R. §§ 240.10b-5], and pendent common law claims. JURISDICTION AND VENUE 21. This court has jurisdiction over the subject matter of this action pursuant

to Section 27 of the Exchange Act [15 U.S.C. §§ 78a-78jj] and its supplemental jurisdiction [28 U.S.C. § 1367]. 22. Venue in this case is proper in this District pursuant to Section 27 of the

Exchange Act [15 U.S.C. § 78aa], and 28 U.S.C. § 1391(b) and (c). Acts giving rise to the violations of law complained of herein, including the dissemination to the investing public of false and misleading information, occurred in this District. 23. In connection with the acts, conduct and other wrongs alleged in this

Complaint, JPMSI, directly and indirectly, used the means and instrumentalities of

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interstate commerce, including the mails, telephone communications and the facilities of national securities exchanges. THE PARTIES 24. Plaintiff Samuel I. Hyland is a resident of New Castle County, Delaware.

Plaintiff owned and sold JPMC common stock during the relevant time period, as set forth in the accompanying certification, incorporated by reference herein. 25. Defendant JPMSI, a Delaware corporation, is a wholly owned subsidiary

of J.P. Morgan Securities Holdings LLC, which, in turn, is a wholly owned subsidiary of JPMC. JPMSI is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and is a member of the National Association of Securities Dealers, Inc., the New York Stock Exchange ("NYSE") and other exchanges. JPMSI acts as a primary dealer in U.S. government securities; makes markets in money market instruments and U.S. government agency securities; underwrites and trades corporate debt- and asset-backed securities, municipal bonds and notes, common and preferred stock, and convertible bonds offerings; advises on business strategies, capital structures and financial strategies; and structures derivative transactions. RELEVANT NON-PARTY PERSONS AND ENTITIES 26. JPMC, a financial holding company incorporated under Delaware law in

1968 with its principal executive offices at 270 Park Avenue, New York, NY 10017, is a global financial services firm involved in investment banking, financial services for consumers and businesses, financial transaction processing, investment management, private banking, and private equity. As of April 30, 2004, prior to the consummation of the Merger, there were 2.08 billion shares of the Company's common stock outstanding. JPMC's common stock is listed and traded on the NYSE under the ticker symbol "JPM." -5-

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27.

Lazard Frères & Co. LLC ("Lazard") served as financial advisor to Bank

One in connection with the Merger. 28. Harrison served as CEO and Chairman of the Board of Directors of JPMC

from 1999 through the end of 2005. He remains Chairman of the Company. Harrison was instrumental in negotiating the Merger. 29. Hans W. Becherer was, during the relevant time, a director of JPMC. He

has been a director of JPMC or a predecessor institution since 1998. 30. Riley P. Bechtel was, during the relevant time, a director of JPMC. He

was a director of JPMC from 1995 until the eve of the May 25, 2004 annual meeting. 31. Frank A. Bennack, Jr. was, during the relevant time, a director of JPMC.

He was a director of JPMC or a predecessor institution from 1981 until the consummation of the Merger on July 1, 2004. 32. John H. Biggs was, during the relevant time, a director of JPMC. He has

been a director of JPMC since March 2003. 33. Lawrence A. Bossidy was, during the relevant time, a director of JPMC.

He has been a director of JPMC or a predecessor institution since 1998. 34. M. Anthony Burns was, during the relevant time, a director of JPMC. He

has been a director of JPMC or a predecessor institution from 1990 until the eve of the May 25, 2004 annual meeting. 35. Ellen V. Futter was, during the relevant time, a director of JPMC. She has

been a director of JPMC or a predecessor institution since 1997.

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36.

Helene L. Kaplan was, during the relevant time, a director of JPMC. She

was a director of JPMC or a predecessor institution from 1987 until the consummation of the Merger on July 1, 2004. 37. Lee R. Raymond was, during the relevant time, a director of JPMC. He

has been a director of JPMC or a predecessor institution since 1987. 38. William H. Gray, III was, during the relevant time, a director of JPMC.

He has been a director of JPMC or a predecessor institution since 1992. 39. John R. Stafford was, during the relevant time, a director of JPMC. He

has been a director of JPMC or a predecessor institution since 1982. 40. Harrison, Becherer, Bechtel, Bennack, Biggs, Bossidy, Burns, Futter,

Gray, Kaplan, Raymond, and Stafford are referred to collectively herein as the "JPMC Directors." 41. By virtue of their positions as directors of JPMC (and, in Harrison's case,

as Chairman and CEO of JPMC as well), the JPMC Directors owed JPMC's shareholders fiduciary obligations and were required: (a) to act in furtherance of the best interests of JPMC's stockholders; (b) to maximize stockholder value in the combination with Bank One; (c) to disclose to JPMC shareholders all material facts concerning the Merger; (d) to disseminate a complete and accurate proxy statement; and (e) to refrain from abusing their positions of control. 42. Dimon was Chairman and CEO of Bank One prior to the Merger and now

serves as CEO of JPMC. CLASS ACTION ALLEGATIONS 43. Plaintiff brings this action on his own behalf and as a class action,

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the class (the "Class") consisting of those present and former JPMC shareholders who held common stock of JPMC at the close of market on January 14, 2004 but sold or otherwise disposed of any or all such stock after the Merger was announced. Excluded from the Class is the Defendant herein; any person related to any of the JPMC Directors; any firm, trust, corporation, or other entity affiliated with any of the JPMC Directors or the Defendant (except for those holding JPMC common stock in solely a fiduciary capacity); the legal representatives, heirs, successors, and assigns of any excluded person; and any entity controlled by any excluded person. 44. 45. This action is properly maintainable as a class action. The members of the Class for whose benefit this action is brought are

dispersed throughout the United States, and are so numerous that joinder of all class members is impracticable. There were in excess of 2 billion shares of JPMC common stock outstanding as of April 30, 2004 held by thousands of JPMC stockholders who are members of the Class. According to the Proxy/Prospectus: The board of directors of JPMorgan Chase has fixed the close of business on April 2, 2004 as the record date for determination of stockholders entitled to notice of and to vote at the annual meeting of stockholders. On the record date, there were 2,081,783,154 shares of JPMorgan Chase common stock outstanding, held by approximately 126,350 holders of record. 46. Plaintiff's claims are typical of the claims of the members of the Class as

all members of the Class were similarly damaged by Defendant's wrongful conduct as complained of herein. Among other things, members of the Class sustained damages as a result of a scheme and public statements issued in connection with the Merger that omitted and/or misrepresented material facts about the Merger that were required to be disclosed. -8-

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47.

Plaintiff will fairly and adequately protect the interests of the members of

the Class and has retained counsel competent and experienced in class and shareholder litigation. Plaintiff has no interests that are in conflict with the interests of the Class. 48. Common questions of law and fact exist as to all members of the Class

and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: a. Whether the federal securities laws were violated by the

Defendant's acts as alleged herein; b. Whether the Proxy/Prospectus, and other documents and/or

statements disseminated to members of the Class in connection with the Merger omitted or misrepresented material facts about the Merger that were required to be disclosed; c. Whether JPMSI acted with the requisite state of mind in

participating in the scheme described herein and omitting to state and/or misrepresenting material facts about the Merger; d. Whether JPMSI aided and abetted the JPMC Directors' breaches

of fiduciary duties owed to Plaintiff and other members of the Class; and e. Whether JPMSI participated in a civil conspiracy to violate the

Exchange Act and Delaware common law; and f. Whether the members of the Class have sustained damages and, if

so, what is the proper measure thereof. 49. In addition, the Class will rely, in part, upon the presumption of reliance

established by the fraud-on-the-market doctrine. The market for JPMC common stock was at all times an efficient market for the following reasons, among others:

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a.

JPMC's common stock met the requirements for listing, and were

listed on the New York Stock Exchange, a highly efficient securities market; b. SEC; c. class period; d. JPMC was followed by numerous securities analysts who wrote JPMC common stock trading volume was substantial during the As a regulated issuer, JPMC filed periodic public reports with the

reports available to investors through various automated data retrieval services; e. JPMC disseminated information on a market-wide basis through

various electronic media services; and f. The market price of JPMC securities reacted efficiently to new

information entering the market. 50. A class action is superior to all other available methods for the fair and

efficient adjudication of this controversy. As the damages suffered by many individual Class members ma y be small relative to the expense and burden of individual litigation, it is practically impossible for most Class members to seek individually to redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. 51. Defendant acted in a manner which affects Plaintiff and all members of

the Class alike, thereby making appropriate relief with respect to the Class as a whole. 52. The prosecution of separate actions by individual members of the Class

would create a risk of inconsistent or varying adjudications with respect to individual members of the Class, which would establish incompatible standards of conduct for

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Defendant, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of other members or substantially impair or impede their ability to protect their interests. SUBSTANTIVE ALLEGATIONS Background: The Besieged Banker 53. In June 1999, Harrison became CEO of Chase Manhattan, the predecessor

of JPMC. According to Harrison, "It's a lot more fun being a CEO than I would have guessed." Liz Moyer, "Banker of the Year: Harrison Has the Helm," The American Banker (Feb. 1, 2001). 54. According to the entry on Harrison in the International Directory of

Business Biographies (St. James Press 2004): Harrison spent exorbitantly on an acquisitions spree, aiming to become a one-stop destination for meeting corporations' financial needs. In 2000 the spree culminated in the $34 billion purchase of J.P. Morgan, a deal that created a major market contender with assets that ranked third behind only Citigroup and Bank of America. Commenting on the contention that he had paid too much, Harrison told Market Week with Maria Bartiromo, "You don't get any great property at a discount." 55. An April 7, 2002 article in the New York Times suggested that Harrison's

motivation in entering into large transactions was not necessarily to benefit shareholders: William B. Harrison was beaming. Mr. Harrison, as chairman of the Chase Manhattan Corporation, had signed a deal to buy J. P. Morgan & Company for $30.9 billion the night before and was already spinning the deal to shareholders. It was mid-September 2000, the economy was in its longest expansion ever, and anything seemed possible. "It's a very fair deal," he said, grinning uncharacteristically. "And most importantly, when we look at the overall transaction two years from now, it should be accretive to the shareholders."

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Mr. Harrison had reason to grin -- and still does, though not because the bank's shareholders have gained as he predicted. Rather than being "accretive" -- that is, increasing earnings per share -- the merger has not delivered much for shareholders so far; the stock has lost more than one-third of its value in 18 months. Mr. Harrison might have been glowing because, like many top executives these days, he was about to be paid -- a lot -- to go shopping. For overseeing the acquisition of J. P. Morgan, which he nonchalantly said took only three weeks to negotiate, he received a special bonus of $20 million -- far more than the total lifetime earnings of the average working stiff. And that bonus, which is spread over 2001 and 2002, came on top of his $1 million salary and $5 million regular bonuses last year and whatever else he receives for this year. Mr. Harrison's three lieutenants, including Geoffrey T. Boisi, a vice chairman who had joined Chase only four months earlier, received special bonuses of $10 million each, on top of their regular salaries and bonuses. All told, Chase directors paid the bank's executives more than $50 million for their outing at the bank mall. (They had done a little window-shopping, chatting up Goldman Sachs and Deutsche Bank, before settling on J. P. Morgan.) 56. In connection with the merger that created JPMC, the Company's

compensation committee, comprised of Gray, Bechtel, Stafford, and Raymond, awarded Harrison $10,000,000 in cash and 237,164 restricted stock units. According to the March 19, 2002 report of the committee, included in the Company's 2002 proxy statement: This award will vest and be paid out or distributed as follows, subject to continued employment: 50% of the cash and 50% of the restricted stock units in January 2002; 50% of the cash in January 2003; and 50% of the restricted stock units if the price of JPMorgan Chase common stock achieves the $52 Target Price by January 25, 2007 (but no sooner than January 25, 2003). The cash awards would be paid out in the event of job elimination, death, or total disability. The restricted stock unit awards would vest and be distributed in the event of death or total disability. In the case of job elimination or retirement, the restricted stock unit awards related to the Target Price would vest only if

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the Target Price is achieved, unless otherwise determined by the committee. 57. Thus, 118,582 of the restricted stock units, which would vest upon JPMC

achieving a target price by January 25, 2007, were "subject to continued employment." If vested at the target price, the units would be worth over $6.1 million. 58. Harrison was notorious not only for being overpaid but also for

overpaying in deal after deal. As an interviewer noted in a February 23, 2004 interview with Harrison on CNBC: "You acquired JP Morgan at the top of the equity bubble, you acquired [Hambrecht & Quist] at the top of the technology bubble, Fleming [Asset Management] at the top of the asset management bubble." 59. A February 7, 2002 article in Forbes entitled "Is Harrison Breaking

Morgan's Bank?" reviewed Harrison's tenure, including its many failures, concluding that "Fiscal 2002 will be the make or break." 60. A June 7, 2002 article in EuroWeek entitled "Time for an outsider to shake

up troubled JP Morgan Chase" strongly criticized Harrison's leadership, pointed out his poor, costly deals, and suggested that Harrison was due to lose his job: Look at the evidence. Today no one questions the fact that Chase's chairman and CEO, Billy Harrison, grossly overpaid for Flemings, the patrician but still itsy-bitsy UK asset manager with a quirky securities operation bolted on to the side. It was a brilliant deal for the Fleming family and blew the myth that Roddy Fleming couldn't cut a deal without the help of his childhood Scottish nanny. Billy Harrison would now probably admit that he was sold a bum steer with Flemings, but he might also blame the purchase on the recently departed Geoff Boisi, who was, after all, in charge of investment banking at the time. However, even if the unassuming Billy Harrison tries to evade the Flemings transaction by pointing an accusing finger at Geoff Boisi, this isn't quite the end of the story.

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The harsh fact is that Chase and Billy Harrison had also significantly overpaid to acquire Geoff Boisi's investment banking boutique, Beacon Group, just because they clamoured for the services of its dynamic leader. It is perhaps even more ironic that Chase's attention was so focused on the brilliance of Mr Boisi that they may not have appreciated that David Coulter, who now has Boisi's old job, also came with the Beacon package. If Chase's Billy Harrison paid over the top for Beacon Group and then Geoff Boisi made the Fleming family rich beyond their wildest dreams, shouldn't Chase shareholders have been wary about the next acquisition? Perhaps there was nothing wrong with putting JP Morgan out of its misery, and the JPM road pointed downhill all the way but did Chase need to pay $34bn for the privilege? Yes, say the JP Morgan fat-cat top managers who walked away with fortunes which in some individual cases exceeded $100m each. No, say the Chase shareholders who must be asking themselves what they actually bought, other than a large can of worms. The combined JP Morgan Chase in its present form is nowhere in investment banking, nowhere in equities and its asset management division can be described as fair to middling rather than the crème de la crème. Most of JP Morgan's old guard has left - who said "Thank heavens"? and for its $34bn, Chase seems to have bought little more than a fizzy derivatives business and an upgrade in debt capital markets. With such a litany of financial misjudgements, you would have thought that shareholders would be baying for blood. At the top of the execution list you might have expected to see JPMC's chairman and CEO, Billy Harrison. However, in the past fortnight it was Boisi who fell rather than Harrison, much to the amazement of most observers and certainly the bookmakers, who will lose a fortune if Harrison is still there by Christmas. The situation regarding Mr Harrison is especially interesting to ourselves, and please be assured that we are not, and never have been, shareholders in either Chase Manhattan, JP Morgan or JP Morgan Chase. In the aftermath of Enron, Billy Harrison's press was so bad that at one time it didn't look as if he would last until

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April - remember those bounders and scallywags who said that the best double bet was for Billy Harrison and Credit Suisse's Lukas Muhlemann to be gone before the first polka dot bikini could be seen on the Côte d'Azure this summer. But while Harrison has defied the bookmakers' odds so far, he must, unless he requires the services of a guide-dog, be able to see the writing on the wall. Chase Manhattan wasn't exactly the most sparkling bank in the universe. By adding Flemings, Beacon Group and JP Morgan, did Chase then become a world-beater? Not at all. Instead, the combined JP Morgan Chase was described to us by one Scottish fund manager as a dog's dinner - presumably a West Highland White or a Scottie? That may be slightly unfair, but when you look at the JPMC share price, you have to ask yourself where it's going. Does he realise his own apparent shortcomings or the possible deficiencies of his subordinates, who are considered to be his most likely successors? We don't think so, when you read that he intends to stay on for another seven years, ie until he is 65. We were almost speechless when we saw that comment, and in the world's main financial centres some irreverent bankers rolled around on the floor with laughter. One prominent private banker in Geneva said: "Mr Harrison must be living in cloud cuckoo land" - and in Switzerland they certainly know their cuckoos. In London, one notoriously aggressive proprietary trader commented: "The odds on Billy Harrison lasting for seven years are longer than those on the United States winning the World Cup." [Emphasis added.] 61. An April 22, 2002 BusinessWeek article on Harrison entitled "The

Besieged Banker" noted that Harrison was "under siege" due to his poorly timed, badly executed, and expensive deals and numerous disastrous loans. Despite JPMC's poor performance under his direction, the article observed that "Harrison stands to earn at least $16 million in merger-related bonuses if the stock recovers to $52, its price the day the [Chase-JP Morgan] deal closed. His top lieutenants will split $25 million more. And they have given themselves plenty of time to do it--until 2007, to be exact." Noting that

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"[t]he execution of the J.P. Morgan merger wasn't much to write home about," the article observed that: Unlike a steel mill or auto maker, a bank's assets are people, not plants. But after paying top dollar for J.P. Morgan (3.5 times its book value), Harrison let its people walk. Defections started as soon as the deal closed--despite hefty retention bonuses that could have yielded executives princely sums. Within a year, 25 top former J.P. Morgan executives had left, and Chairman Douglas A. "Sandy" Warner III quit at the end of 2001. "We would have liked some of them to stay," says Harrison. "But I don't think it has cut into the core of what we're about." 62. management: In interviews about management style, [JPMC] executives invariably quote [former General Electric Co. CEO Jack] Welch. They preface answers with "As Jack says..." and few quote Harrison or even mention him unless they're asked. As bank executives tell it, Harrison emphasizes what they call "the soft stuff"--management coaches, 360degree reviews, discussing problems until everyone is singing in harmony. Trouble is, Harrison has to be more than a choirmaster, he needs his managers to make their numbers. 63. A subsequent January 13, 2003 article on Harrison in a BusinessWeek The article also observed internal criticisms of Harrison's poor

report on "The Best & Worst Managers" noted that "Some investors speculate that Harrison could lose his job by the end of January if the bank's fourth-quarter results, due out mid-month, don't show signs of improvement." (Emphasis added.) 64. According to a January 19, 2004 article by Aaron Elstein in Crain's New

York Business: "One of Wall Street's favorite games for the past two years has been guessing when William B. Harrison, the embattled chairman and chief executive of [JPMC], would finally be shown the door."

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65.

According to analyst Michael Mayo of Prudential Equity: "The biggest

problem of [JPMC's] management, we believe, is lack of capital discipline when it comes to large strategic acquisitions..." However, Harrison's lust for corporate conquest remained unfulfilled and he desperately needed a major event to salvage his career. 66. The January 18, 2004 Sunday Tribune described Harrison's predicament:

[A] little more than 18 months ago Harrison's fortunes, and those of his bank, were so down in the dumps that few would have given odds on him even surviving the year, let alone clawing his way back to pull off one of the biggest banking mergers of all time. Serious business downturns nearly always claim at least one banking casualty, and of the American banks, JP Morgan Chase looked easily the most vulnerable. What's more, it seemed to be largely Harrison's fault. At the top of the bull market, he had forked out $ 32bn in Chase Manhattan equity to acquire JP Morgan. [Emphasis added.] 67. From June 1999 (when Harrison became CEO of JPMC) to January 14,

2004 (the date the Merger was announced), the price of JPMC stock fell 18 percent, from $48.08 to $39.22. By contrast, during the same period, the stock price of Citigroup (a large financial conglomerate and JPMC rival) climbed 66 percent and the S&P Financials index (an index of 81 large banks) rose 16 percent. 68. Characteristic of JPMC's performance under Harrison was JPMC's

September 17, 2002 announcement that its third-quarter earnings would be lower than analysts' expectations, causing shares to tumble as much as 13 percent. JPMC also revealed that its bad loan portfolio was expected to climb by about $1 billion, up 40 percent; that trading revenues for July and August had fallen to just $100 million, compared to $1.1 billion for the full second quarter; and that the Company faced a potential $1 billion loss on its Enron surety bond claims.

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69.

JPMC's involvement in financial scandal also has marked Harrison's

tenure. In particular, JPMC found itself targeted in securities litigation involving Enron, WorldCom, and initial public offering ("IPO") allocation. 70. A July 22, 2004 Wall Street Journal article entitled "J.P. Morgan Results

Damped by Scandals" reported that "despite the [M]erger and other steps to move beyond recent scandals, [JPMC] is still haunted by its ties to recent controversies." 71. On September 18, 2002, the Wall Street Journal published an op-ed

submission by Harrison in which he strongly rejected any charges of misconduct by JPMC under his leadership in connection with either the Enron fraud or the IPO allocation scandal. Harrison concluded: "To say that [banks] contributed to or even condoned fraud, when the evidence indicates that they have been among the parties most damaged, only adds insult to injury." 72. Despite Harrison's public protestation of complete innocence, on July 28,

2003, JPMC paid $135 million to settle an action commenced by the SEC, which charged that JPMC aided and abetted Enron's unlawful manipulation of its reported financial results through a series of complex structured finance transactions. 73. On October 1, 2003, JPMC paid another $25 million to settle an action

brought by the SEC in connection with JPMC's role in the IPO allocation scandal, involving allegations that numerous IPOs were manipulated by Wall Street investment banks to artificially inflate the market price of those securities and to conceal the amounts of compensation actually received by the underwriters. 74. By late 2003, Harrison was desperate to buy himself time not only to

retain the lucrative pay and prestige of the CEO position but also because he had 118,582

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restricted stock units which would vest upon JPMC achieving a target price by January 25, 2007, but which were "subject to continued employment." If vested at the target price, the units would be worth over $6.1 million. Dimon's Destiny: If I Were King of a Megabank... 75. Dimon is known as the once protégé of Citigroup chief Sandy Weill. "By

the mid-1990s, Dimon was Weill's heir apparent, says Mary McDermott, 60, a retired Citigroup senior vice president who worked with Weill for 34 years and has known Dimon since 1982. `Jamie was indispensable to Sandy,' McDermott says. `He was Sandy's alter ego.'" Edward Robinson, "J.P. Morgan's Dimon to Show Citigroup Who's Boss," Bloomberg (July 1, 2004). "`He was Sandy's intellectual torpedo,' says William McCormick, 63, a former American Express executive vice president. `He worked on whatever issues were hot.'" Ibid. Under Weill's mentorship, Dimon developed a reputation as a shrewd operator as well as a powerful manager with immense credibility in the financial services industry. 76. Dimon's entry in the International Directory of Business Biographies (St.

James Press 2004) describes the dramatic arc of his ascent under Weill and his unceremonious ouster from Citigroup: SHAPED BY A MENTOR In 1978 Dimon graduated cum laude from Tufts University. He worked for the Management Analysis Center, a consulting firm in Boston, for several years and then enrolled in Harvard Business School. The Harvard professor Jay O. Light noted in BusinessWeek, "He was generally perceived as one of the very brightest guys in finance in that class" (October 21, 1996). While a student at Harvard, Dimon interned at Goldman Sachs and was offered a job there after graduation in 1982. He declined, instead going to work for the mentor who - 19 -

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would profoundly shape his career: Sandy Weill. The two men had met six years earlier; Weill knew Dimon's father and the two families had formed a close relationship, convening annually for Passover dinners. Dimon's mother gave Weill a copy of the college thesis her son had written about the 1970 merger of the two brokerage firms Shearson Hammill and Hayden Stone--a union engineered by Weill, who had been running Hayden at the time. Impressed, Weill offered Dimon a summer job. Recalled Weill in the New York Times, "After a week he was telling me how we could do things better" (July 13, 1995). BUILDING FROM THE GROUND UP From 1982 to 1985 Weill and Dimon teamed up at American Express, where Dimon signed on as vice president and assistant to the president. Dimon's abilities to crunch numbers meshed well with Weill's people skills. When Weill was forced out of American Express, he made Dimon his second in command at the little-known consumer-lending outfit that he bought called Commercial Credit Company. That tiny firm was the beginning of what would eventually become Citigroup; as quoted by the New York Times, when asked about his decision to stay with Weill, Dimon replied, "I love the idea of being in on the ground floor" (July 13, 1995). RESTRUCTURING AN ULTIMATE WINNER Dimon was a key member of the team that launched and defined Commercial Credit's strategy. He served as the company's chief financial officer and an executive vice president and then later as president. Through the course of Dimon's time at the firm, Commercial Credit was completely restructured and made numerous acquisitions and divestitures, substantially improving its profitability. The most significant transaction was the 1987 acquisition of Primerica Corporation, which included Smith Barney. Commercial Credit then assumed the Primerica name. In 1983 Primerica had acquired the Travelers Corporation (of which Smith Barney was a part), which had then been renamed Travelers Group. Between 1987 and 1994 the Travelers unit of Primerica touted compound annual growth of 21 percent in per-share earnings--an achievement that executives credited to Dimon's staunch financial discipline.

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EMERGING FROM MERGER AFTER MERGER At Travelers, Dimon was named chairman and CEO of its Smith Barney subsidiary in January 1996, having previously served as COO and chief administrative officer. Dimon's father had once worked at Smith Barney, so the younger Dimon knew the firm well; he would help transform Smith Barney from a small brokerage into a major Wall Street player. He was put in charge of integrating Smith Barney with Shearson, the brokerage business that Smith Barney purchased in 1993. Dimon recalled the difficulty of extricating Shearson from Lehman Brothers, its former sister company, and from American Express, its old parent--comparing the process in the New York Times to "splitting apart Siamese twins" (July 13, 1995). Elsewhere he stumbled trying to build the company's investment-banking business, luring bankers from Morgan Stanley with exorbitant pay packages that robbed colleagues of a substantial portion of the bonus pool. Morale declined and dozens of bankers left the company. In January 1996 Dimon apologized to his team, as quoted by BusinessWeek: "I know I made mistakes, and I'm sorry. Let's move forward" (October 21, 1996). A PRECOCIOUS PERFORMER Dimon quickly rebounded and in 1996 became the chairman and CEO of Travelers' Smith Barney subsidiary--at age 40 he was the youngest CEO of a major securities firm. His achievements included spearheading the firm's arrival on the Internet, making Smith Barney the only brokerage to tie into the widely used personal-finance software program Quicken, and pushing the company to become the first brokerage to offer no-load mutual funds to customers. As Dimon emerged from his mentor's shadow with the confidence to make his own decisions, tensions between the two began to surface. One insider who wished to remain anonymous noted in BusinessWeek, "Jamie's riding high on Smith Barney's success. He can hold stronger views than ever before" (October 21, 1996). NUMBERS ARE NOT EVERYTHING A bullish market--along with Dimon's unrelenting focus on keeping costs down--continued to fuel Smith Barney's strong performance. In 1996 the company's return on equity was among the highest in the industry; in the second

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quarter of that year it was a record 36.7 percent. In the fall of 1996 Smith Barney contributed 30 to 40 percent of its parents' earnings. Dimon's only demerit throught [sic] that period of time was his lack of people skills; during one meeting with 20 employees, as reported by BusinessWeek, Dimon openly disparaged one underling, saying, "That is the stupidest thing I ever heard" (October 21, 1996). An employee who witnessed the exchange noted, "It wasn't personal or mean spirited, but he would be more effective if he would lighten up" (October 21, 1996). TOO MANY MERGERS COMPROMISE QUALITY In November 1997, with the merger of Smith Barney and Salomon Brothers, Dimon became cochairman and co-CEO of the combined firm. In 1998 Weill and Dimon engineered a $73 billion deal: Travelers Group, the brokerage and investment-banking and insurance giant they had created from humble beginnings, purchased the retail market leader Citicorp to form Citigroup. Their aim was nothing less than to transform the financial-services landscape by creating the first comprehensive financial-services behemoth with dealings in both the consumer and corporate banking markets. For half a year after the $73 billion 1998 merger of Citicorp and Travelers, Dimon, Sir Deryck Maughan, and Victor Menezes were all given co-CEO status to supervise the investment-banking segment of Salomon Smith Barney (SSB). Under their watch SSB lost hundreds of millions of dollars in overseas markets and other risky bond investments. POWER STRUGGLES DESTROY A RELATIONSHIP Concurrently the tension between Dimon and Weill reached a boiling point when Dimon refused to appoint Weill's daughter, Jessica Bibliowicz, as chief of asset management at Travelers and as well to turn over Salomon's bond business to Weill's son, Marc. A $1.3 billion trading loss in Dimon's Salomon division further exacerbated the situation. On November 1, 1998, the man Dimon had once referred to as a second father asked him to resign. Dimon said several years later in Money magazine, "It was a surprise. And yes, it was hard, because that company was my baby, my family" (February 2002).

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Dimon had been forced out. Given the choice between his own children and his "adopted" son, Sandy Weill had favored his blood. Ironically both of Weill's children wound up leaving their father's firm. The news of Dimon's departure seemed to stun Wall Street, which had expected Dimon to become chairman of Citigroup after Weill's retirement. Sally Krawcheck, the analyst at Sanford C. Bernstein & Company, told the Washington Post, "I was shocked, followed by terror about his resignation. I went through mourning, denial, all that stuff. This is a man who is tremendously respected" (November 3, 1998). In fact Dimon was so well respected that when he stepped onto the Salomon Smith Barney trading floor after handing in his resignation, one thousand traders responded by giving him a standing ovation. In the Washington Post a Salomon investment banker said, "We all wanted to hate him, but he turned out to be a real quality guy. He was thoughtful and always willing to spend time explaining" (November 3, 1998). In a coincidental twist, in 2003 Krawcheck joined Citigroup as director of research for its Smith Barney Division--the unit Dimon had helped build. As far as Dimon was concerned, Weill's motivation in forcing out his right-hand man and protégé of 17 years was transparent. He compared the situation to a Shakespearean tragedy, casting himself as the Earl of Kent, who paid the price for challenging the authority of King Lear. TIED TO THE BANKING INDUSTRY On March 27, 2000, after an 18-month break from the financial-services industry, Dimon became the chairman and CEO of Bank One, the fifth-largest bank in the country. Dimon said he turned down top jobs at Amazon.com and other coveted employers because banking was an inextricable part of his life. As he told Money magazine, he came to his decision after taking more than a year off: "I just took out that old white pad: Maybe I want to be an investor. Maybe I want to be a teacher. Maybe I want to write books. Maybe I want to stay home and be with my kids when they're growing up. I thought about all of that, and I was very open-minded about it, and what I came to is: My craft is financial services. Right or wrong, that's what I know, and I'm pretty good at it" (February 2002).

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Dimon had been hired to turn around the ailing Bank One, which had been hit by a series of management missteps and earnings shortfalls beginning in 1999 that left the bank with a $511 million net loss in 2000. Dimon told the Lafayette (IN) Journal and Courier, "I want to make the company strong so it's a predator, not the prey" (April 3, 2000). Dimon backed up his words with cash, buying two million shares of his new company. He remarked in Money magazine, "Ownership is a critical thing. Even if you run a retail store, you think, `Hey, it's my store, my company,' and you run it like it's your own. And I learned that from Sandy" (February 2002). A FOCUS ON COSTS BEGETS A TURNAROUND In his first year at Bank One, Dimon strengthened the management team and fortified the corporation's balance sheet, saving more than $1 billion through waste-reduction efforts. He severed relationships with corporate borrowers that failed to purchase the company's more profitable services, such as money management and stock underwriting, and closed the much-hyped but unprofitable online division, WingspanBank.com. Each of the company's 1,800 offices were ordered to post profit-andloss statements, and branch managers were compensated based on net revenues, not sales. Dimon scrutinized every dollar the company spent. As reported by Money, when a high-level executive informed him of the numerous subscriptions held by the company, Dimon said, "You're a businessman; pay for your own Wall Street Journal" (February 2002). During this period Dimon's conservative side emerged. After taking the reins at Bank One, he immediately implemented a complex risk-management system that left the company with a more diversified investment portfolio. The procedure put in place by that system led Bank One to reduce loans to WorldCom and other risky firms by billions of dollars--before the technology market tanked; Dimon's leadership was prescient. Effective May 2004 Dimon's former employer Citigroup agreed to pay $2.65 billion to settle a lawsuit brought by WorldCom investors, opening an expensive new chapter in the company's efforts to clean up after various corporate scandals. Dimon judiciously turned down several possible deals. Household International, the struggling consumer-finance

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company based in the Chicago area, went up for sale in 2002. Dimon was more than familiar with the firm's core business: like Commercial Credit, the outfit he had developed with Weill, Household offered loans to consumers with poor credit. But Dimon passed; Household was later sold to HSBC. Dimon told London's Financial Times, "I don't think we are ready to take on whole other business lines" (March 28, 2003). 77. Despite Dimon's successful turn at the helm of Bank One, he was not

content to lead a Midwestern financial institution; rather, he sought to reclaim the mantle of Wall Street superstar. If he could not be chief of Citigroup, then he would parlay his Bank One success into becoming the head of some other Wall Street megabank. 78. While JPMC shareholders endured Harrison's reign, Dimon created

substantial value for Bank One shareholders. From March 27, 2000, when Dimon became Chairman and CEO of Bank One, to just before the Merger was announced, the price of Bank One shares rose 41 percent, from $32.00 to $45.22. During the same period, the price of JPMC stock fell 38 percent and the S&P Financials index increased only 18 percent. The Entrenchment Scheme : Merging Jupiter and Apollo 79. By late 2003, the fallout from various scandals entangling JPMC, as well

as his poor business decisions, forced the besieged banker Harrison to conjure yet another massive deal to protect his position. 80. According to an article published on July 7, 2004 by the online magazine

Slate (owned by The Washington Post Co.) entitled "The $7 Billion Ego: Did J.P. Morgan Chase waste billions so its CEO could keep his job?": Harrison's grip at the helm was growing tenuous. But he saw salvation in yet another deal. Chicago-based Bank One, run by the charismatic Citigroup exile Jamie Dimon, seemed like a natural acquisition. Dimon had pulled off an - 25 -

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impressive turnaround at Bank One. With his operational expertise and cadre of loyal bankers, Dimon could help improve morale and performance at Chase and eventually succeed Harrison. [Emphasis added.] 81. During November 2003, Harrison and Dimon commenced negotiations

concerning the possibility of a business combination between JPMC and Bank One. Among other things, Harrison and Dimon discussed the possible structure of such a transaction. Each side retained legal and financial advisors in connection with the merger discussions. JPMC retained JPMSI, its wholly-owned subsidiary, as its financial advisor for an extraordinary fee of $40 million. As the Proxy/Prospectus itself admitted, "[JPMC's] Financial Advisor is an Affiliate of [JPMC] and May be Deemed to Have Conflicts of Interest." (Emphasis added.) This statement was misleading because JPMSI is not simply a JPMC affiliate; rather, it is a wholly-owned and controlled subsidiary. Only by retaining a conflicted financial advisor could Harrison control the process and justify paying more than was necessary for Bank One. 82. According to a January 17, 2005 article in Investment Dealers Digest

entitled "Putting JPMorgan On the Map," the negotiations were conducted in the utmost secrecy "at an apartment in the Waldorf Towers, a sanctuary a few blocks from JPMorgan's midtown headquarters that the bank keeps as a permanent venue for quiet meetings with clients." As the merger discussion proceeded, JPMSI and Lazard came up with the codenames of "Apollo" and "Jupiter" for Bank One and JPMC, respectively, to ensure the secrecy of the negotiations. 83. According to a January 15, 2004 CBS Marketwatch.com article, "By

December, according to a person at the table, Dimon and Harrison and a few other

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executives huddled in the conference room of Bank One's M&A law firm, Wachtell Lipton Rosen & Katz." 84. The Investment Dealers Digest article reports that: "Sources agree that

Harrison and Dimon ironed out a lot of the deal's particulars together and that Dimon was clearly interested in succeeding Harrison from the get-go[.]" 85. According to the Proxy/Prospectus, Harrison briefed the full Board on his

discussions with Dimon at a meeting of the JPMC Directors on November 18, 2003 and the Company's board authorized Harrison to continue discussions regarding a possible business combination with Bank One. 86. The January 19, 2004 Financial Times described the negotiation process:

"There was a spectrum of outcomes in terms of premium and governance: Jamie laid them out and Bill was very responsive in December as the bid-ask spread narrowed," said another negotiator. But deal talks reached what one participant described as an "impasse" just before the Christmas holidays, as both parties stiffened their positions. Despite the earlier progress, negotiations hinged on finding a balance between two key issues: the price Mr. Dimon would extract for Bank One's shareholders - later fixed at a 14 per cent premium -- and the terms of his succession. [Emphasis added.] 87. Although Harrison wanted to merge JPMC with Bank One, he refused to

relinquish his position as CEO. Dimon, on the other hand, sought to be CEO immediately. 88. Ultimately, Harrison agreed to an unfair exchange ratio in order to

continue as CEO of the combined entity for two years after the Merger, with the expectation of remaining the Company's Chairman thereafter. Little did JPMC shareholders know that this extra time for Harrison would cost them billions of dollars.

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89.

Harrison would later claim that he offered a no-premium merger during

the negotiations. However, Harrison's claims omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. A January 26, 2004 FORTUNE article entitled "The Dealmaker and the Dynamo" detailed the negotiations and reported Harrison's claims: It was early January, and the merger talks between Jamie Dimon, CEO of Bank One, and William Harrison, his counterpart at J.P. Morgan Chase, were deadlocked. In the short time they'd been negotiating, Dimon, a brash boy wonder from Queens, and Harrison, a courtly Southern gentleman, had agreed on a host of issues. Succession was a snap: Dimon would get a virtually ironclad guarantee to replace Harrison as CEO in 2006. The board would be split fifty-fifty between Bank One and J.P. Morgan directors. Dimon's most trusted lieutenants would be given key roles in the merged company. Most of all, the two men agreed that if they could pull off this deal, combining Bank One's strong consumer businesses and J.P. Morgan's corporate banking franchise, they could create a true banking colossus--the second largest in America and one that could go toe to toe with giant Citigroup. What was hanging up the deal was the price. Harrison was offering what he calls a "market deal," meaning that J.P. Morgan would simply buy Bank One at its current stock price--around $45 a share. His reasoning was simple. "We'd been criticized for overpaying on past deals, notably Chase's acquisition of J.P. Morgan in 2000," says Harrison. "I thought that if we paid a big premium again, the market would hammer our stock." Dimon, however, was demanding a markup north of 20%. Pointing to Bank of America's bid to buy FleetBoston for a gigantic 43% premium in late October, Dimon argued that Harrison would be getting a bargain at 20% to 25% over market. In vintage, ultra-enthusiastic Dimon style, the Bank One CEO insisted that the fit was so compelling that even with a big premium, the market wouldn't discount J.P. Morgan's stock. "Jamie was so excited by the combination that he thought he could sell a high premium deal to investors," says Harrison with a grin. "I disagreed." [Emphasis added.] - 28 -

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90.

However, after the Merger received shareholder approval, it was revealed

that, in fact, Dimon had been willing to agree to a no-premium deal if he could be CEO of the combined company immediately. 91. On June 27, 2004, the New York Times published an article by Landon

Thomas, Jr., entitled "The Yin, the Yang and the Deal," which revealed that: During the negotiations with Mr. Dimon, [Harrison] fought hard to give himself the two extra years, to secure a smooth transition, although he may have cost J.P. Morgan shareholders extra money in doing so. Mr. Dimon, always the tough deal maker, offered to do the deal for no premium if he could become chief executive immediately, according to two people close to the deal. When Mr. Harrison resisted, Mr. Dimon insisted on a premium, which Mr. Harrison was able to push down to 14 percent. The two men declined to comment on the specifics of their negotiations. [Emphasis added.] 92. As revealed in "The Yin, the Yang and the Deal," Harrison had been

presented with an option: (a) merge Bank One into JPMC using an exchange ratio of 1.153,1 and serve as Chairman but not CEO of the combined Company; or (b) merge Bank One into JPMC using an exchange ratio of 1.32, and serve as both Chairman and CEO of the combined Company. Harrison chose (b). This secret deal, in effect an option which was exercised, was the most critical term of the Merger. 93. For Harrison and Dimon this undisclosed provision was plainly the sine

qua non of the Merger. However, Harrison, Dimon, and their advisors, including JPMSI, understood that JPMC's shareholders would not have approved the Merger had they known of the entrenchment scheme. In particular, JPMC shareholders would not have

1

This exchange ratio would not have represented any premium over the market value of Bank One shares, based on the closing stock prices of JPMC and Bank One on January 14, 2004. However, given the market's possible anticipation of merger synergies, this lower exchange ratio does not mean that Bank One's price per share would not have surged had the Merger been announced with a 1.153 exchange ratio.

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preferred Harrison over Dimon as the CEO of the combined Company. Moreover, as set forth below, a substantial number of JPMC shareholders specifically did not want the Chairman and CEO positions to be held by the same person. 94. According to Landon Thomas, Jr., the financial advisors had actual

knowledge of Dimon's willingness to agree to a zero-premium deal if he could be CEO immediately and the fact that Harrison turned down this opportunity in order to keep the CEO title. 95. The June 27, 2004 New York Times article was the first opportunity for

JPMC stockholders to have discovered that Harrison had turned down a no-premium opportunity and that he and JPMSI had engaged in a deceptive entrenchment scheme. 96. A January 15, 2004 CBS Marketwatch.com article is consistent with this

account: "The [merger] talks ran through Christmas week and during that time, the stickiest issue, succession, was resolved by the two-year compromise." However, while this account, the January 19, 2004 Financial Times article, and the January 26, 2004 FORTUNE article entitled "The Dealmaker and the Dynamo" all corroborate the portrait of the negotiations in the June 27, 2004 New York Times article, none of the previous articles revealed or even suggested the entrenchment scheme. 97. With the unfair exchange ratio agreed upon in exchange for a guarantee of

his continuation as CEO, Harrison presented the proposed Merger to the other JPMC Directors, who knew or should have known about the quid pro quo. Nevertheless, after receiving JPMSI's misleading opinion that the deal was fair, the JPMC Directors approved the Merger.

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98.

After the close of trading on January 14, 2004, JPMC and Bank One

issued a joint press release (the "Press Release") announcing their agreement to merge: NEW YORK and CHICAGO, January 14, 2004 - J. P. Morgan Chase & Co. (NYSE: JPM) and Bank One Corporation (NYSE: ONE) today announced that they have agreed to merge in a strategic business combination establishing the second largest banking franchise in the United States, based on core deposits. The combined company will have assets of $1.1 trillion, a strong capital base, 2,300 branches in seventeen states and top-tier positions in retail banking and lending, credit cards, investment banking, asset management, private banking, treasury and securities services, middle-market, and private equity. With balanced earnings contributions from retail and wholesale banking, the combined company will be well-positioned to achieve strong and stable financial performance and increase shareholder value through its balanced business mix, greater scale, and enhanced efficiencies and competitiveness. The agreement, which has been unanimously approved by the boards of directors of both companies, provides for a stock-for-stock merger in which 1.32 shares of JPMorgan Chase common stock will be exchanged, on a tax-free basis, for each share of Bank One common stock. Based on JPMorgan Chase's closing price of $39.22 on Wednesday, January 14, 2004, the transaction would have a value of approximately $51.77 for each share of Bank One common stock, and would create an enterprise with a combined market capitalization of approximately $130 billion. The premium, based upon the average closing stock prices of JPMorgan Chase and Bank One for the previous month, would be approximately 8 percent and would be approximately 14 percent based on today's closing prices. Under the agreement, the combined company will be headed by William B. Harrison, 60, as Chairman and Chief Executive Officer, and by James Dimon, 47, as President and Chief Operating Officer, with Mr. Dimon to succeed Mr. Harrison as CEO in 2006 and Mr. Harrison continuing to serve as Chairman. The company's sixteen-member Board of Directors will have fourteen outside directors, seven each from JPMorgan Chase and Bank One, plus Messrs. Harrison and Dimon. ... 99. As one observer related on eFinancialNews.com on February 8, 2004,

after hearing the announcement of the Merger: One of the first calls I received was: "That's a hell of a price that Bill Harrison is paying to recruit Jamie Dimon." ...

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Has Harrison sold JP Morgan Chase down the river to Bank One and Dimon just to save his own skin? [Emphasis added.] 100. The Press Release made no mention at all of Harrison's rejection of the

opportunity to merge Bank One into JMPC without any acquisition premium. Nor did it disclose that Harrison agreed to the premium solely to give himself two more years as CEO of JPMC. Accordingly, the Press Release omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. 101. Also, the Press Release falsely represented that Harrison would head the

combined Company, when, in fact, Dimon would be the true CEO of JPMC even though he would not have the CEO title "on paper." 102. Within minutes of the announcement of the Merger, JPMC shares fell 4

percent to $37.50 at 4:47 p.m. in after-market trading, from a market closing price that day of $39.22. The drop reflected the unnecessarily dilutive impact of the Merger. By contrast, in early trading the next day, Bank One shares rose $6.28, or nearly 14 percent. 103. deal: Do not doubt for a minute that the real winn