SEOUL — J.P. Morgan & Co., the fourth-largest U.S. bank, agreed Thursday to acquire a 10% stake in SK Securities Co., settling a $380-million lawsuit and ending more than a year of legal wrangling with several Korean financial institutions over derivatives losses, SK said.
J.P. Morgan will invest $85 million in SK Securities by subscribing to the Seoul-based company's imminent $250-million share sale, which is partly aimed at raising money to pay J.P. Morgan an unspecified settlement fee.
"This is a win-win arrangement," said Yoon Soon Han, general counsel for SK Group, which controls the brokerage. "SK Securities can normalize its business while J.P. Morgan recovers a considerable amount of losses as well as securing a business opportunity."
The agreement will end legal disputes between J.P. Morgan and SK Securities, Housing and Commercial Bank, Daehan Investment Trust Co. and Korea Investment Trust Co. The only outstanding dispute--for more than $100 million--yet to be settled is with Boram Bank, which was taken over by Hana Bank in January.
"We are very pleased that we have reached a settlement which provides us with a chance to focus on future relations," said Shuri Fukunaga, a J.P. Morgan spokeswoman in Tokyo.
The disputes with Korean companies arose over who should be responsible for derivatives losses caused by the sudden devaluation of the Thai baht in July 1997, which helped tip Asia into a recession.
J.P. Morgan stock closed at $114.25, up 94 cents on the New York Stock Exchange.