JPMorgan Chase & Co.
) $4.5-billion mortgage securities deal with nearly 21
institutional investors has been approved by the trustees of the
securities. The settlement accord was announced in Nov 2013, just a
few days prior to the $13 billion deal with U.S. regulators.
Nevertheless, the settlement accords for 6 of the 330 residential
mortgage-backed securities (RMBS) trusts issued by JPMorgan and
Bear Stearns have been rejected by the trustees. Further, 27 trusts
have obtained extension till Oct 1, 2014 to approve the accord.
The deal, concerning JPMorgan's sale of RMBS during 2005-2008 by
misrepresenting facts about the quality of loans underlying these
securities, settles the allegations against the bank. Notably, the
compensation does not pertain to RMBS sold by Washington Mutual.
Both Bears Stearns and Washington Mutual were acquired by JPMorgan
The institutional investors include BlackRock, Inc. (
), MetLife, Inc. (
), Pacific Investment Management Company, LLC, The Goldman Sachs
Group, Inc. (
), and several others.
In a similar move, Bank of America Corp. (
) had announced an $8.5-billion settlement deal with 22
institutional investors in 2011. Though largely approved by the
judge in the New York court, appeals are still pending against the
JPMorgan has been facing several litigation issues and probes for
its business conduct in the pre-financial crisis period. Though the
company has resolved quite a few of such cases, they continue to
hurt its financials.
Currently, JPMorgan carries a Zacks Rank #3 (Hold).
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