JPMorgan Chase & Co  agreed to pay $388 million to resolve a lawsuit by investors who claimed that the U.S. bank provided misleading information about the safety of $10 billion worth of residential mortgage-backed securities (MBS) it sold before the financial crisis, according to multiple media reports.
The Fort Worth Employees' Retirement Fund and other investors in nine offerings made before the 2008 financial crisis brought the lawsuit fort, according to Bloomberg Business writer Patricia Hurtado . They accused JPMorgan of misleading them about the underwriting, appraisals, and credit quality of the home loans underlying the certificates. She adds that after the 2008 collapse of Lehman Brothers Holdings Inc., the certificates were worth 62 cents on the dollar at most, the investors said.
According to Reuters' reporter Sneha Banerjee , in 2013, JPMorgan agreed to a $13 billion settlement with the Justice Department over allegations that the bank had misled investors in MBS about the soundness and risks of the investments that helped bring on the subprime-mortgage crisis of 2008. JPMorgan has said throughout the litigation process that the poor performance of the certificates was not due to the quality of the loans, but was caused by the collapse of the overall economy, Banerjee added.
The $388 million settlement was disclosed in a Manhattan federal court filing on Friday, Hurtado said. As part of the settlement, the bank denied any wrongdoing and a judge must decide whether to approve the pact.
“We couldn’t have achieved such a stellar recovery without the leadership of the Northern and Southern California Laborers Pension Funds,” Luke Brooks, a lawyer for the plaintiffs, said in a statement.“These funds not only stepped forward to protect their participants’ hard earned retirement savings, but equally importantly they committed themselves to the trial of this action, which allowed us to maximize the recovery for the class.”
Bloomberg Business noted that Joseph Evangelisti, a spokesman for New York-based JPMorgan, declined to comment on the settlement.
The case is Fort Worth Employees’ Retirement Fund v. J.P. Morgan Chase & Co., 09-cv-3701, U.S. District Court, Southern District of New York (Manhattan).