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Federal judge grants preliminary approval for JPMorgan settlement

The US District Court for the Southern District of New York [official website] granted JPMorgan Chase [corporate website; JURIST news archive] permission on Monday to pay $44.6 million in order to resolve allegations of fraudulent bidding practices for state and local government investment securities at taxpayers' expense. The approval came after an order [text, PDF] in March granting preliminary approval of class action settlement that set a final approval date to Monday. Judge Victor Marrero granted preliminary approval in the current case of conspiracy in fixing prices and rigging bids on municipal bond transactions and said that the settlement merits the approval as fair, reasonable and adequate.

The settlement followed JPMorgan's agreement of last July to pay a total of $228 million to federal and state authorities. It agreed [JURIST report] to pay $51.2 million to the affected municipalities, and its affiliates agreed to pay $177 million to settle parallel charges from other federal and state authorities including 25 states' attorneys general, the Securities and Exchange Commission, the Internal Revenue Service, the Office of the Comptroller of the Currency and the Federal Reserve Board [official websites]. JPMorgan was accused of having used "fraudulent practices, misrepresentations, and omissions affected the prices of the reinvestment instruments, deprived the municipalities of a conclusive presumption that their reinvestment instruments were purchased at fair market value, and/or jeopardized the tax-exempt status of the underlying securities, thereby injuring numerous Municipalities." A month earlier JPMorgan reached [JURIST report] a $153.6 million settlement for fraud charges brought by the SEC for misleading investors during the housing crises.

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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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