J.P. Morgan (JPM) Sued by New York Over Alleged MBS Fraud
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J.P. Morgan (NYSE: JPM) shares are indicated higher in early trading Tuesday following news that New York filed a lawsuit against the bank over Bear Stearns role in the financial crisis of 2008.
New York state attorney general Eric Schneiderman filed a the complain on Monday. He alleges that Bear Stearns committed fraud in the sale of certain mortgage-backed securities, saying the firm knew -- or should have known -- the securities were highly-likely to default.
In total, about $22.5 billion in loses by investors are coming under scrutiny following MBS sales by Bear Stearns in 2006 and 2007.
For J.P. Morgan, the question becomes how much it is liable given many of the sales happened before Bear Stearns was acquired by J.P. Morgan in 2008.
Unlike previous cases filed by regulators against the large banks, this suit targets alleged fraud across the firm rather than confining it to just a single deal. The suit also uses New York's Martin Act, which doesn't need to prove that a firm intended to defraud investors in order to win a case.
J.P. Morgan is up 0.1 percent ahead of the opening bell.
New York state attorney general Eric Schneiderman filed a the complain on Monday. He alleges that Bear Stearns committed fraud in the sale of certain mortgage-backed securities, saying the firm knew -- or should have known -- the securities were highly-likely to default.
In total, about $22.5 billion in loses by investors are coming under scrutiny following MBS sales by Bear Stearns in 2006 and 2007.
For J.P. Morgan, the question becomes how much it is liable given many of the sales happened before Bear Stearns was acquired by J.P. Morgan in 2008.
Unlike previous cases filed by regulators against the large banks, this suit targets alleged fraud across the firm rather than confining it to just a single deal. The suit also uses New York's Martin Act, which doesn't need to prove that a firm intended to defraud investors in order to win a case.
J.P. Morgan is up 0.1 percent ahead of the opening bell.
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