JPMorgan Chase (JPM) agreed to a settlement with the U.S. Securities and Exchange Commission regarding delinquent residential mortgage-backed securities offerings, with two-thirds issued by Bear Stearns.
While JPMorgan consented to the filing of the complaint, the bank did not admit or deny the allegations. The company will pay $297 million in penalties and disgorgement.
The SEC claims JPMorgan lied about the status of delinquent mortgages, which provided collateral for RMBS now endorsed by the bank.
The federal New York court approved the settlement. The SEC said the payments would be distributed to investors who lost the money.
About 620 delinquency loans were more than 30 days delinquent at the cut-off date for the offering. By the time of the remittance report, 364 loans were reported delinquent to investors.
“In many ways, mortgage products such as RMBS were ground zero in the financial crisis,” said director of the SEC’s Division of Enforcement Robert Khuzami in a statement.
He added, “Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed. Today’s actions involving RMBS securities are a continuation of the SEC’s strong efforts to pursue wrongdoing committed in connection with the financial crisis.”
