JPMorgan Credit Suisse to Pay 417M in RMBS Settlement

center_img “”JPMorgan Securities LLC””:http://www.jpmorganchase.com/corporate/Home/home.htm and “”Credit Suisse Securities (USA)””:https://www.credit-suisse.com/us/en/ paid a combined $416.9 million to settle charges of misleading investors in the sale of residential mortgage-backed securities (RMBS), the “”Securities and Exchange Commission””:http://www.sec.gov/index.htm (SEC) announced.[IMAGE]According to the SEC’s complaint against JPMorgan, the bank misstated information about the delinquency status of mortgages that provided collateral for an RMBS offering it underwrote. JPMorgan received fees of more than $2.7 million, and investors sustained losses of at least $37 million on undisclosed delinquent loans, the SEC says. JPMorgan is also charged for Bear Stearns’ failure to disclose its practice of keeping cash settlements from mortgage loan originators on problem loans that it sold into RMBS trusts. JPMorgan acquired Bear Stearns in 2008. The proceeds from this bulk settlement practice were at least $137.8 million, the SEC says.JPMorgan agreed to pay $269.9 million to settle the charges. It did not admit or deny the charges.””The SEC’s complaint makes allegations under the negligence-based provisions of the federal securities laws and does not include charges of intentional misconduct. J.P. Morgan is pleased to have reached agreement with the SEC to put these matters concerning RMBS behind it,”” the bank said in a statement.In Credit Suisse’s case, the SEC alleges the firm similarly failed to disclose its practice of retaining cash from the settlement of claims against originators for problems with loans sold into trusts. Credit Suisse also made misstatements in SEC filings about when it would repurchase loans from trusts if borrowers missed the first payment due, the agency says. According to the SEC, Credit Suisse made $55.7 million in profits and losses avoided from its bulk settlement practice, and its investors lost more than $10 million due to the firm’s practices concerning first payment defaults.Credit Suisse has agreed to pay $120 million to settle the charges. Like JPMorgan, the firm neither confirmed nor denied the allegations and pointed out in a statement that the SEC’s allegation was of negligence and not of intentional recklessness.The combined money will be distributed to “”harmed investors,”” the SEC said.Robert Khuzami, director of the SEC’s Division of Enforcement, said products such as RMBS were “”ground zero in the financial crisis.””””Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed,”” Khuzami said. “”Today’s actions involving RMBS securities are a continuation of the SEC’s strong efforts to pursue wrongdoing committed in connection with the financial crisis.””The charges were filed in coordination with the “”RMBS Working Group””:http://www.sec.gov/about/offices/owb/owb-rmbs.shtml, a federal-state task force launched to investigate “”those responsible for misconduct that contributed to the financial crisis through the pooling and sale of RMBS.”” Khuzami works as a co-chair of the group.””Today’s actions are another step forward in the process of bringing accountability for the misconduct that led to the collapse of the housing market,”” said New York State Attorney General Eric Schneiderman, another of the RMBS Working Group’s co-chairs. “”We will continue to work together on behalf of consumers and investors to ensure that it never happens again.”” JPMorgan Chase Mortgage-Backed Securities Processing RMBS RMBS Working Group U.S. Securities & Exchange Commission 2012-11-19 Tory Barringerlast_img

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