(By Karl Denninger)
CHICAGO, Aug 6 (Reuters) - JPMorgan Chase & Co on Monday sought to limit the power the bankruptcy trustee for Peregrine Financial Group has to subpoena information from financial institutions that did business with the failed brokerage.
JPMorgan said in a court filing that Trustee Ira Bodenstein's request for authorization from a bankruptcy court to serve subpoenas on financial information may be overly burdensome by encompassing Peregrine's affiliates and wholly owned subsidiaries, in addition to the brokerage itself.
In other words "there might be something here we don't want you to see, especially if you look real closely."
Here's the thing -- subpoenas are not "zero cost" deals on either side. Not only does the Trustee have to spend time (money) going through returned material the third-party target is entitled to a statutory amount of money in compensation for compliance.
Now it's a different matter if the subpoena is issued for improper or vexatious purpose (e.g. with an intent to disrupt someone's business with a third party.) But in this case there apparently are real issues of fact that are intended to be discovered and it's difficult to imagine how serving subpoenas related to PFG Best could possibly disrupt JP Morgan's business with other customers or vendors.
JPMorgan also objected to Bodenstein's request that the bankruptcy court prohibit subpoenaed financial institutions from recouping any costs incurred with providing documents.
Ok, that's reasonable. But there's a differnce between "any costs" and statutory costs. Is JP Morgan trying to charge some sort of "research fee"? The per-page cost for production (or its electronic equivalent) is a standard thing that has been allowed forever, and (IMHO) is entirely proper.
What's not, and what Bodenstein may have been trying to evade, is JP Morgan attempting to claim that it had a need to charge hundreds (or thousands!) of dollars an hour for "research expenses" to locate and produce the documents, rather than the actual production costs themselves.
It's reasonable to be compensated for the actual cost of paper and toner, etc. It's not to be "compensated" for alleged "research expenses" when the documents requested are ordinary business that you either (1) already do have or (2) damn well should have.