First Niagara: Financial Winner

NEW YORK ( TheStreet) -- First Niagara Financial Group ( FNFG) was the winner among the largest U.S. financial companies on Tuesday, with shares rising 3% to close at $8.20.

The broad indexes followed European markets down, as investors worried over the timing of Spain's expected bailout from the European Union, which would spur bond-buying by the European Central Bank. Reuters reported that Spain was read to request a bailout, but that Germany was pressuring Spain to delay its request, citing anonymous senior European sources.

New York State Attorney General Eric Schneiderman made a splash, filing a civil suit against JPMorgan Chase ( JPM), over mortgage-backed securities sold by Bear Stearns before that company was acquired by JPMorgan in March 2008, alleging fraud that led to investor losses of $22.5 billion.

Investors shrugged, sending JPMorgan' shares down a nickel, to close at $40.92.

The complaint filed in New York State court on Monday doesn't specify specific damages being sought.

Thomas Gorman, a former Senior Counsel in the Securities & Exchange Commission's Division of Enforcement, says that "this suit is significant for two reasons. Initially, it is the first to be brought by the President's new working group. Perhaps more importantly, it is the first regulatory suit that focuses on the MBS market which was central to the market crisis and attempts to hold a major player in that market accountable for its action. This contrasts sharply with prior suits brought by the SEC which center on a transaction."

Considering the likelihood of JPMorgan Chase settling the charges, Gorman says "the case was just filed, so it is difficult to assess if they might settle. The fact of the matter is most of these cases do settle."

"Settling this case is complicated by the fact there are a number of class actions out there that have been pending for a while that make similar allegations, so resolving the case with the New York Attorney General could potentially impact the other cases."

The KBW Bank Index ( I:BKX) rose slightly to close at 49.86, with 14 of the 24 index components showing gains for the session.

First Niagara's shares have now declined 3% year-to-date, following a 35% decline during 2011.

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