The state of New York filed suit against JPMorgan Chase and its subsidiary JPMorgan Securities on Monday over the allegedly fraudulent sales of mortgage-backed securities ahead of the US financial crisis.
New York’s attorney general accused the bank and the securities unit, which at the time was the separate Bear Stearns & Co, of systematically selling the residential mortgage-backed securities (RMBS) as carefully evaluated and structured products, when in fact they were slapped together with little regard to quality or viability.
The suit accused JPMorgan Chase, the then-Bear Stearns and a third company, EMC Mortgage, of lying to buyers of the securities over the quality of their underlying assets, which were hundreds of thousands of home mortgages.
The attorney general said the fraudulent marketing of the RMBS from 2005 to 2007 caused losses of US$22.5 billion, 26 percent of their original face value.
“Defendants led investors to believe that Defendants had carefully evaluated — and would continue to monitor — the quality of the loans in their RMBS,” the suit said.
“In fact, 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,” it added. “As a result, the loans in Defendants’ RMBS included many that had been made to borrowers who were unable to repay, were highly likely to default, and did in fact default in large numbers.”
Bear Stearns collapsed in 2007 to 2008, the first major casualty of the financial crash that was rooted in the imploding housing sector.
JPMorgan Chase took the company over in March 2008 in a deal organized by the US Federal Reserve to prevent the imploding investment bank’s losses from pulling down other banks.
The New York attorney general called for the court to force disgorgement of earnings and benefits on the sales of the RMBS, pay restitution to investors and order defendants to pay unspecified damages.
EXTRATERRITORIAL REACH: China extended its legal jurisdiction to ban some dual-use goods of Chinese origin from being sold to the US, even by third countries Beijing has set out to extend its domestic laws across international borders with a ban on selling some goods to the US that applies to companies both inside and outside China. The new export control rules are China’s first attempt to replicate the extraterritorial reach of US and European sanctions by covering Chinese products or goods with Chinese parts in them. In an announcement this week, China declared it is banning the sale of dual-use items to the US military and also the export to the US of materials such as gallium and germanium. Companies and people overseas would be subject to
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will
TENSE TIMES: Formosa Plastics sees uncertainty surrounding the incoming Trump administration in the US, geopolitical tensions and China’s faltering economy Formosa Plastics Group (台塑集團), Taiwan’s largest industrial conglomerate, yesterday posted overall revenue of NT$118.61 billion (US$3.66 billion) for last month, marking a 7.2 percent rise from October, but a 2.5 percent fall from one year earlier. The group has mixed views about its business outlook for the current quarter and beyond, as uncertainty builds over the US power transition and geopolitical tensions. Formosa Plastics Corp (台灣塑膠), a vertically integrated supplier of plastic resins and petrochemicals, reported a monthly uptick of 15.3 percent in its revenue to NT$18.15 billion, as Typhoon Kong-rey postponed partial shipments slated for October and last month, it said. The
COLLABORATION: The operations center shows the close partnership between Taiwan and Japan in the field of semiconductors, Minister of Economic Affairs J.W. Kuo said Tokyo Electron Ltd, Asia’s biggest semiconductor equipment supplier, yesterday launched a NT$2 billion (US$61.5 million) operations center in Tainan as it aims to expand capacity and meet growing demand. Its new Taiwan Operations Center is expected to help customers release their products faster, boost production efficiency and shorten equipment repair time in a cost-effective way, the company said. The center is about a five-minute drive from the factories of its major customers such as Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) advanced 3-nanometer and 2-nanometer fabs. The operations center would have about 1,000 employees when it is fully utilized, the company
RSS