Judge rules syndicated loan was not a security in victory for JPMorgan Chase and three other banks

JPMorgan Chase & Co.
JPM,
+0.14%
and three other banks on Thursday won an appeal in U.S. District Court for the Southern District of New York that held that a $1.78 billion leveraged loan extended in 2014 to urine testing company Millennium Laboratories does not fit the legal definition of a security. In a decision with positive implications for bank and private credit lenders, Circuit Judge Jose A. Cabranes said the plaintiff in the case, Marc S. Kirschner, trustee of the Millennium Lender Claim Trust, “has failed to plead facts plausibly suggesting that the [leveraged loan] notes are securities.” Citigroup Inc.
C,
-0.09%,
Bank of Montreal
BMO,
-0.12%
and SunTrust Bank were also plaintiffs along with JPMorgan Chase. Legal experts have said that a ruling against JPMorgan would have made syndicated loans more expensive for borrowers because the transactions would have to comply with securities laws on the federal and state levels.