Those key banks are among several financial firms named in the Phoenix Light SF Limited v. JPMorgan Securities Case. The billion-dollar case hit a New York court this week adding to the ongoing RMBS-investor lawsuit wave.
Plaintiffs from multiple companies, most of which are incorporated in the Cayman Islands and Ireland, filed the complaint, claiming the big banks, their subsidiaries and other financial firms made misrepresentations about the quality of loans packed into bonds sold off to investors.
JPMorgan and the other banks named in the case, which include Merrill Lynch (now part of Bank of America (BAC)), are accused of misrepresenting "key statistical characteristics of the mortgage loans underlying the securities, including the loans' loan-to-value ratios and combined loan-to-value ratios, as well as the percentage of owner-occupied properties."
The complaint alleges the underlying loans were in essence weaker than disclosures suggested, leading ultimately to losses on the investment — in some cases, the entire value of the securities.
The companies filing the suit accused the big banks of common law fraud, fraudulent inducement, negligent misrepresentation and aiding and abetting fraud.