The Clearing House Association (TCH) and the Loan Syndications and Trading Association (LSTA) filed an amicus brief in the Second Circuit in support of JPMorgan’s petition for a rehearing or rehearing en banc for the court to reconsider a panel decision that unsettles bedrock principles of agency law that limit a principal’s liability for its agent’s unauthorized acts. The panel decision found JPMorgan liable for its agent’s unauthorized conduct in releasing collateral securing a particular syndicated loan. The brief highlights the critical importance of the ability of syndicate lenders to rely on the limits set forth in their formal agreements to restrict their agents’ authority to act on their behalf. If this fundamental principle of agency law is overturned, principals will be forced to incur significant costs to monitor the conduct of their agents, thereby undermining the efficiency of the loan syndication market, a key source of financing for many job-creating large and middle market companies in the United States, and needlessly increasing the risks associated with those loans.
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