NY AG Launches Securities Fraud Lawsuit Against JP Morgan
In what is the first legal action being taken by a government group created by President Obama to combat securities fraud, New York Attorney General Eric T. Schneiderman has announced a Martin Act lawsuit against J.P. Morgan Securities LLC (formerly Bear Stearns & Co. Inc.), JP Morgan Chase Bank, N.A., and EMC Mortgage LLC. (formerly known as EMC Mortgage Corporation) alleging securities fraud.
Schneiderman also acts as the co-chair of the Residential Mortgage-Backed Securities (RMBS) Working Group , the group organized by Obama. His lawsuit alleges that the companies engaged in fraudulent misrepresentations and omissions to investors in order to promote the sale of residential mortgage-backed securities.
The three companies allegedly deceived investors regarding how they evaluated the quality of mortgage loans packaged into residential mortgage-backed securities prior to the eventual collapse of Bear Stearns in 2008. To date, the losses incurred from the collapse have totaled approximately $22.5 billion.
“This lawsuit will bring accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said Schneiderman. “Our lawsuit demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. We believe that this is a workable template for future actions against issuers of residential mortgage-backed securities that defrauded investors and cost millions of Americans their homes."
Steve Linick, the inspector general of the Federal Housing Finance Agency, added that Fannie Mae and Freddie Mac both purchased residential mortgage-backed securities from the companies in question and were allegedly misled about the quality of the loans supporting the securities.
”Actions like this contributed to the financial crisis and those who engaged in such activities should be held accountable,” he added. “My office has worked and continues to work very closely with the RMBS Working Group and the New York Attorney General’s Office in support of the investigation and prosecution of RMBS fraud cases.”
The RMBS Working Group is a state-federal task force that was created by President Obama this year to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities.
If you or a loved one has been taken advantage of by any type of securities fraud scam, there may be legal options worth considering. Call Sokolove Law today to learn more about possibly pursuing a securities fraud lawsuit.