Worst-Case Scenario Losses for JP Morgan & Chase May Be As High as $4.5 Billion

The Wall Street Journal is reporting that JP Morgan Chase & Co., in its yearly Securities and Exchange Commission filing, said it may be facing up to $4.5 billion in legal losses over the losses it accounts for in its established litigation reserves. The SEC had asked for this additional disclosure in the wake of the economic crisis that has left many investment banks contending with securities fraud complaints from investors.

JP Morgan Chase’s $4.5 billion figure is a worst-case estimate. This means that additional losses could be anywhere from 0 to much higher than $4.5 billion. The investment bank is unable to make estimates at this time on over 10,000 legal proceedings.

JP Morgan also included a disclosure that it had received informal requests and subpoenas for information regarding its mortgage business. Many of the investors who have made securities fraud claims sustained their losses from their purchase of mortgage-backed securities during the housing market collapse. The investment bank said that some of the investigations came about following its announcement of a foreclosure moratorium because of issues with its foreclosure practices.

Other investment banks have also provided their worst-case scenarios:

• Citigroup Inc. estimated its worst-case scenario at $4 billion
• Wells Fargo & Co. estimated $1.2 billion
• Bank of America Corp. estimates about $1.5 billion

Related Web Resources:
J.P. Morgan Faces $4.5 Billion in Worst-Case-Scenario Losses, The Wall Street Journal, February 28, 2011

JP Morgan Chase and Co, SEC FIlings, Yahoo Finance

More Blog Posts:
Insurer Claims that JP Morgan and Bear Stearns Bilked Clients Of Billions of Dollars with Handling of Mortgage Repurchases, Institutional Investors Securities Blog, February 3, 2011

JPMorgan Chase & Co. CEO Warns Municipal Bond Investors to Expect More Bankruptcies, Institutional Investors Securities Blog, January 18, 2011

Our institutional investment fraud lawyers represent clients who sustained financial losses related to mortgage-backed securities, auction-rate securities, and other financial instruments. Contact Shepherd Smith Edwards & Kantas LTD LLP today. Your first consultation with us is free.