JPMorgan to pay US$153m to settle fraud charges
Published:Wednesday | June 22, 2011 | 12:00 AM
JPMorgan Chase & Company will pay US$153.6 million to settle civil fraud charges over misleading investors into purchasing complex mortgage securities just before the housing market collapsed.
The settlement with the Securities and Exchange Commission announced Tuesday is one of the most significant legal actions targeting Wall Street's role in the 2008 financial crisis.
As part of the settlement, investors who were harmed will receive all of their money back, the SEC said. JPMorgan also agreed to improve the way it reviews and approves mortgage securities transactions.
The bank neither admitted nor denied wrongdoing under the settlement.
Regulators have been investigating a number of major banks and more charges are expected.
The SEC also charged Edward Steffelin, who headed the team at an investment firm involved in the selection of mortgage securities.
The SEC said in a lawsuit filed in federal court in Manhattan that JPMorgan allowed the Magnetar Capital hedge fund to improperly choose assets for a big mortgage securities deal. JPMorgan failed to disclose to investors that Magnetar played a big role in choosing the securities and stood to benefit if they defaulted, the SEC said.
- AP