JPMorgan and Institutional Investors Agree to $4.5B Mortgage-Backed Securities Settlement

JPMorgan Chase & Co. (JPM) says it will pay $4.5 billion to investors for losses that they sustained from mortgage-backed securities that were purchased from the firm and its Bear Stearns Cos. during the economic crisis. The institutional investors include Allianz SE (AZSEY), BlackRock Inc. (BLK), Pacific Investment Management Group, MetLife Inc. (MET), Goldman Sachs Asset Management LP, Western Asset Management Co., and 16 of other known institutional entities. This is the same group that settled their MBS fraud case against Bank of America Corp. (BAC) for $8.5 billion.

The $4.5 billion will be given to 330 RMBS trusts’ trustees over investments that were sold by the two financial institutions between 2005 and 2008. A number of the trustees, including Bank of New York Mellon Corp. (BK) still have to approve the agreement, as does a court.

Still, the claims related to the Washington Mutual-sold MBS have yet to be resolved.
JPMorgan believes that Federal Deposit Insurance Corp., which seized Washington Mutual and sold it to the firm, should be responsible for covering those MBS fraud claims. Meantime, the FDIC is arguing that when JPMorgan acquired Washington Mutual it also inherited its liabilities.

Also still up for resolution is Deutsche Bank National Trust Company’s private securities lawsuit on behalf of over 100 trusts related bonds that were issued by JPMorgan, Washington Mutual (WAMUQ) and the FDIC. No one wants to agree on who should be liable after the bonds did badly. Deutsche Bank (DB), however, wants up to $10 billion for the trusts.

This latest securities fraud settlement is separate from the tentative $13 billion one reached between JPMorgan and the Justice Department over its mortgage practices leading up to the 2008 financial crisis. The firm also just settled with Freddie Mac (FMCC) and Fannie Mae (FNMA) for $5.1 million over 129 securities that the two mortgage financial companies bought from it for $33 million.

Our RMBS fraud lawyers represent institutional investors and high net worth investors. Contact The SSEK Partners Group today and ask us for your free case assessment.

JPMorgan Reaches $4.5 Billion Settlement With Investors, NY Times, November 15, 2013

J.P. Morgan Reaches $4.5 Billion Settlement With Investors, Wall Street Journal, November 15, 2013

More Blog Posts:
J.P. Morgan’s $13B Residential Mortgage-Backed Securities Deal with the DOJ Stumbles Into Obstacles, Stockbroker Fraud Blog, October 28, 2013

JPMorgan’s Admission to CFTC of “Reckless” Trading Could Lead to More Securities Fraud Cases, Institutional Investor Securities blog, November 4, 2013

Massachusetts AG Investigates JPMorgan’s Debt-Collection Practices, Stockbroker Fraud Blog, September 24, 2013