Legal Beagles Bite JPMorgan

Maybe JPMorgan Chase (JPM Quote) needs to hire some new lawyers.

For the second time in two years, the nation's third-largest bank has bungled its handling of a major lawsuit.

A federal appeals court ruled late Tuesday that a suit claiming that Wall Street banks manipulated the prices of hundreds of dot-com IPOs should never have been certified as a class action.

The news should be a victory for the big investment banks, which have fought the suit every step of the way. But JPMorgan, at least, has egg on its face once again -- because it moved in April to reach an early $425 million settlement in the case.

At the time, many were saying the decision to settle was a shrewd move, since JPMorgan had long ago set aside money for a possible payout. But now, legal experts say JPMorgan could be out the money in a case that otherwise may not yield big paydays for plaintiff lawyers. Lawyers say a settlement is like a contract and the parties are bound to it, unless there is an out clause.

It's not clear how JPMorgan intends to proceed in the wake of the ruling by the Court of Appeals for the Second Circuit. A bank spokesman declined to comment.