JPMorgan Chase & Co. (JPM), the biggest U.S. bank, will pay $297 million to settle U.S. regulatory claims that it violated federal securities laws in connection with billions of dollars of sales of residential mortgage-backed securities tied to subprime mortgage loans.
Without admitting or denying the Securities and Exchange Commission's allegations, JPMorgan agreed to settle the case, according to filings today in federal court in Washington. The agreement needs approval from a U.S. judge.
The SEC is seeking to wrap up probes into how banks bundled and pitched investments tied to risky home loans, after years of being accused by lawmakers and investors of failing to punish Wall Street for misconduct that may have fueled the housing bubble and financial crisis. JPMorgan already has been sued by state and federal watchdogs over sales of mortgage-backed securities to Fannie Mae and Freddie Mac and loans sold to investors by Bear Stearns Cos., which the bank bought in 2008.
JPMorgan, led by Chief Executive Officer Jamie Dimon, 56, said last year it was in advanced talks to settle a broad SEC inquiry into how firms packaged and sold mortgage-backed securities as the housing market unraveled. Early this year, the SEC joined a state-federal task force set up by President Barack Obama to root out misconduct involving those instruments.
JPMorgan said in February it was warned by SEC employees that they may bring civil claims linked to two inquiries. One, targeting a JPMorgan subsidiary, focused on securitization disclosures. The other involved loans included in Bear Stearns securitizations. This month, the bank said it reached an "agreement in principal" to resolve SEC claims. The deal needed final SEC and court approval, the firm said at the time.
The case is Securities and Exchange Commission v. JPMorgan Securities LLC, 12-cv-01862, U.S. District Court, District of Columbia (Washington).
