PMorgan Chase & Co agreed to pay US$388 million to settle a lawsuit by investors who claimed the bank misled them about the safety of US$10 billion worth of residential mortgage-backed securities, a lawyer said.
The lawsuit, brought by the Fort Worth Employees’ Retirement Fund and other investors in nine offerings made before the financial crisis, claimed JPMorgan misled them about the underwriting, appraisals and credit quality of home loans underlying the securities. Following the 2008 collapse of Lehman Brothers Holdings Inc, the certificates were worth US$0.62 on the dollar at most, the investors said.
The settlement was disclosed in a filing on Friday in a Manhattan federal court. The bank denied wrongdoing as part of the accord. A judge must decide whether to approve the pact.
JPMorgan in 2013 agreed to a US$13 billion settlement with the US to resolve allegations the bank misled investors in mortgage-backed securities about the soundness and risks of the investments that helped trigger the subprime-mortgage crisis of 2008.
“We couldn’t have achieved such a stellar recovery without the leadership of the Northern and Southern California Laborers Pension Funds,” a lawyer for the plaintiffs Luke Brooks said in a statement. “These funds not only stepped forward to protect their participants’ hard earned retirement savings, but equally importantly they committed themselves to the trial of this action, which allowed us to maximize the recovery for the class.”
JPMorgan spokesman Joseph Evangelisti declined to comment on the settlement.
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