JPMorgan Sued by N.Y. for Fraud Over Mortgage Securities:
JPMorgan Chase & Co. (JPM), the biggest U.S. bank, was sued by New York Attorney General Eric Schneiderman over accusations that a business acquired in its takeover of Bear Stearns Cos. fraudulently marketed and sold mortgage-backed securities. JPMorgan deceived investors about the defective loans backing securities they invested in, leading to “monumental losses,” Schneiderman said in a complaint filed today in New York State Supreme Court. “Defendants systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans,” Schneiderman’s office said. The current cumulative realized losses on more than 100 subprime and Alt-A securitizations that the defendants sponsored and underwrote in 2006 and 2007 total about $22.5 billion, or about 26 percent of the original balance of about $87 billion, the state said.Joe Evangelisti, a JPMorgan spokesman, said the New York- based bank would contest the complaint, which is “entirely about” conduct by Bear Stearns. JPMorgan acquired Bear Stearns in 2008. “We’re disappointed that the NYAG decided to pursue its civil action without ever offering us an opportunity to rebut the claims and without developing a full record — instead relying on recycled claims already made by private plaintiffs,” Evangelisti said in an e-mail. The case is People of the State of New York v. J.P. Morgan Securities, 451556-2012, New York State Supreme Court (Manhattan).