Explainer-Does Trump have a case against JPMorgan for closing his accounts?

By Tom Hals

Jan 24 (Reuters) – US President Donald Trump on Thursday filed a $5 billion lawsuit against JPMorgan Chase and its CEO Jamie Dimon for allegedly closing its accounts for political reasons.

Here’s a look at Trump’s claims and how the case might play out:

WHY IS TRUMP LIEING?

The largest US bank closed the accounts of several Trump businesses in April 2021 after they had been customers for decades, according to Trump’s lawsuit. JPMorgan notified Trump of the shutdown about a month after his supporters stormed the US Capitol building on January 6, 2021.

Trump said the bank’s motivation was political and that JPMorgan violated Florida law prohibiting unfair business practices and acted in bad faith.

Trump also accused Dimon of ordering a malicious “blacklist” to warn other banks about doing business with the Trump Organization, Trump family members and Trump himself. Trump said the publication of this blacklist amounted to commercial libel under Florida law and said his businesses suffered considerable financial and reputational damage as a result.

The lawsuit occurred after Dimon criticized immigration policy and Trump’s proposal to limit interest rates that banks charge on credit cards.

JPMorgan denied wrongdoing, saying the lawsuit had no merit and that it closes accounts that pose a legal or regulatory risk to the company.

WHAT WILL TRUMP HAVE TO SHOW TO PREVENT?

The case will likely boil down to whether Trump’s legal team can prove that the bank canceled the accounts because of his political views. The terms of banking agreements tend to strongly favor banks, which do not have to provide a reason for closing an account and customers often do not know why their accounts are terminated.

In this case, Trump said JPMorgan gave 60 days’ notice of closing the account but did not provide a reason.

Banks must monitor their customers for a variety of potential risks, and a customer who had an account closed due to prohibited activity such as money laundering would have no reason to challenge it.

However, some reasons for terminating an account may be considered an unfair business practice or bad faith, including closing an account because of a customer’s religion or ethnicity.

Legal experts said that canceling an account because of the political viewpoint of an account holder, which JPMorgan said it does not, would probably not be allowed.

However, it may be legal if the opinions of an account holder were so extreme that they undermined trust in the bank. Trump could argue that his political views were mainstream as he had just collected more than 70 million votes when he lost the November 2020 election.

What about the trade libel claim?

Trump’s trade libel claim stems from the blacklisting allegation. Trump claims that JPMorgan’s blacklist is reserved for clients who have engaged in abuse or other actions worthy of having their accounts closed. Trump said his business accounts were in good standing before being added to the list.

In February 2024, nearly three years after the accounts were closed, a New York state judge found Trump and his businesses liable for civil fraud, in a case brought by the state’s attorney general. A state appeals court later threw out a half-billion-dollar penalty against Trump without fully overturning the fraud finding. Both sides appealed.

Legal experts said that commercial libel claims usually involve a defendant accused of disparaging a plaintiff’s product to gain a competitive advantage – an aspect that is missing from Trump’s allegations. The claim will depend on the existence of a blacklist and whether JPMorgan made disparaging statements to other banks about Trump and his businesses that were false.

HOW WILL THE CASE GO?

The case was filed in Florida state court in Miami-Dade County. JPMorgan may try to take the case to federal court, which is often the preferred venue for corporate defendants. Unlike Florida probate court judges, who are generally elected, federal judges are appointed for life. Capital One is defending a similar case from Trump businesses, which was brought before the federal court.

JPMorgan will likely try to get the lawsuit dismissed quickly by arguing that the allegations are too speculative to support a case. If Trump can pass this stage, it clears the way to take discovery and request documents and access to witnesses inside the bank.

HOW CAN THE CASE BE RESOLVED?

If JPMorgan, which is heavily regulated by the federal government, cannot get the case dismissed, it will be under pressure to settle before trial.

Trump is seeking $5 billion, but damages depend on the disruption caused to Trump’s businesses by moving to another financial institution. The president said the account closures forced him to go to “small banks all over the place.”

Trump has sued several media businesses in his personal capacity since returning to the White House and two of those cases were quickly settled, while others are still litigated.

(Reporting by Tom Hals in Wilmington, Delaware; Additional reporting by Jonathan Stempel in New York; Editing by Noeleen Walder and Bill Berkrot)