Updated with comment from JPMorgan.
NEW YORK ( TheStreet) -- JPMorgan Chase (JPM) and Credit Suisse (CS) will pay more than $400 million combined to settle allegations that the banks misled investors in residential mortgage backed securities (RMBS) offerings, regulators said on Friday.
JPMorgan will pay $297 million to settle charges that it misstated information about the delinquency status of the underlying loans of an RMBS offering. JPMorgan received $2.7 million as fees as underwriter, while investors lost $37 million, the complaint said.
JPMorgan's Bear Stearns unit was also charged for its failure to disclose its practice of keeping cash compensation from originators of problem loans that the investment bank has sold into RMBS trusts. That practice earned the unit proceeds of at least $137.8 million.Credit Suisse will pay $120 million to settle similar charges. The charges were brought by the SEC in conjunction with the Residential Mortgage Backed Securities Group. "Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed. Today's actions involving RMBS securities are a continuation of the SEC's strong efforts to pursue wrongdoing committed in connection with the financial crisis," SEC Director of Enforcement Robert Khuzami said. Read more in the SEC
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