NEW YORK ( TheStreet) -- Shares of bankrupt Seattle thrift Washington Mutual (WAMUQ.PK) continued to trade heavily Monday following news late last week of a likely settlement between the company, JPMorgan Chase ( JPM) and the Federal Deposit Insurance Corp..

JPMorgan acquired most of WaMu's assets after it was seized by regulators on Sept. 25, 2008. Since then, attorneys for WaMu's holding company have been fighting in court with JPMorgan attorneys and the FDIC over billions in assets. The agreement announced Friday, which has still to be approved by a bankruptcy judge, would allow WaMu to keep about $4 billion in deposits, while awarding it nearly $2 billion more in tax refunds, according to a report from CRT Capital Group. Most of that money will go to WaMu creditors, as, most probably will a $1.55 billion refund to the FDIC, the report states.

That does not leave enough for equity holders, however. The common shares, which had rallied early last week as a resolution of the bankruptcy appeared imminent, fell sharply on Friday after an attorney representing Washington Mutual announced an agreement that would wipe out equity holders. After losing some 17 cents to close at 20 cents on Friday, WaMu's Pink Sheets-listed shares fell more than three cents again Monday on volume of more than 60 million.

Hope for equity holders would appear to rest on a class action lawsuit filed in Texas that has moved to a court in Washington D.C. Plaintiffs in the lawsuit, JPMorgan American National Insurance Co. vs. FDIC, argue that JPMorgan "motivated by greed and unrestrained by moral or legal boundaries...exploited a perceived liquidity crisis in the banking industry to improperly and illegally take advantage of the financial difficulties of Washington Mutual."

Brian Rosen, an attorney representing WaMu at Weil, Gotshal & Manges, said in court Friday that WaMu would try to get the lawsuit dismissed as part of the bankruptcy settlement. A call to the plaintiffs' attorneys was not returned, nor was a call to an attorney representing a committee of WaMu equity holders.

A group of WaMu shareholders calling itself WaMuTruth.com put out a press release Sunday denouncing the proposed settlement, calling it an "unprecedented surrender." Attempts to identify and interview the authors of the release were unsuccessful.

-- Written by Dan Freed in New York.