JPMorgan Facing RMBS Fraud Suit in NY: Report
NEW YORK (TheStreet) -- JPMorgan Chase (JPM) is reportedly being accused of fraud by New York Attorney General Eric Schneiderman.
According to The Wall Street Journal, Schneiderman has filed a civil complaint against the bank related to its alleged role in the sale of toxic residential mortgage-backed securities.
The suit is the first to be filed "under the aegis of a law enforcement group that was formed by President Barack Obama in January to pursue alleged wrongdoing related to the financial crisis," the Journal said, and similar actions against JPMorgan's investment bank brethren -- Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), and Morgan Stanley (MS) as well as other players in the crisis -- could follow.
The WSJ article quoted an unnamed official in Schneiderman's office as saying: "We intend to follow up with similar actions against other sponsors and underwriters of RMBS."
The suit apparently relates to billions of dollars worth of subprime mortgage securities issued by Bear Stearns, which JPMorgan later bought when it fell into distressed straits in 2008. JPMorgan shares were dipping in after-hours action, sliding 33 cents, or 0.76%, to $40.66 on volume of more than 655,000, according to Nasdaq.com. --Written by Michael Baron in New York.>To contact the writer of this article, click here: Michael Baron.
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