JP Morgan sues a startup that glamorised its popularity
Financial conglomerate that bought startup Frank for $175 million is suing its founder
JPMorgan Chase & Co. is suing the founder of Frank, a college financial-planning site it acquired in 2021, for defrauding the bank by exaggerating the number of customers the company had.
The bank claims that it paid $175 million based on the belief that the company had 4.265 million customers, but discovered that it actually had fewer than 300,000 customers. The bank alleges that Charlie Javice and another executive, Olivier Amar, used fake customer accounts to deceive the bank into completing the deal. They also received $26 million in the deal as a result of their misconduct.
Javice, the founder of Frank, is counter-suing JPMorgan in stage court in Delaware, alleging that the bank failed to conduct proper due diligence before buying the company and is trying to deflect attention from its own violation of student privacy laws. Javice’s attorney, Alex Spiro, claims that JPMorgan committed misconduct and then tried to retrade the deal.
In her suit, Javice also alleges that the bank used an internal investigation of the Frank deal as an excuse to fire her as head of student solutions and deny her a $20 million retention bonus.
Javice claims that she has incurred hundreds of thousands of dollars in legal fees and that JP Morgan has refused to cover them or advance expenses as required by the Frank buyout agreement.
JPMorgan, the largest US bank with a balance sheet of over $3.3 trillion, has been on a buying spree of start-ups since CEO Jamie Dimon announced in 2020 that he wanted to acquire more financial technology firms focused on sustainable investing and tax issues.
