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US Attorneys investigating JPMorgan for violation of federal securities laws

JPMorgan Chase & Co. [corporate website] disclosed in its quarterly filing with the Securities and Exchange Commission [official website] on Wednesday that it is being investigated by both the civil and criminal divisions of the US Attorney's Office for the Eastern District of California (EDC) [official website] over sales of mortgage-backed securities to investors in the run-up to the sub-prime mortgage crisis [JURIST news archive]. In May JPMorgan received notice [Reuters report] that the EDC's civil division had preliminarily concluded that the firm violated federal securities laws by offering subprime and Alt-A residential mortgage securities during 2005 to 2007. JPMorgan also said the US Office of the Comptroller of the Currency [official website] has said it intends to seek an administrative order over how it had handled collections of consumer credit card debt.

JPMorgan's disclosures came one day after the US Department of Justice (DOJ) [official website] filed suit [JURIST report] against Bank of America (BOA) [corporate website], claiming the corporation misled investors about securitized loans worth more than $850 million. In an announcement earlier that week, Attorney General Eric Holder [official profile] remarked [press release] that the suit against BOA prove that the Financial Fraud Enforcement Task Force [official website] is taking an aggressive approach to uncovering abuses in the residential mortgage-backed securities market. The announcement comes after years of criticism by homeowners, investors and politicians that federal and state investigators have failed to bring criminal charges against high-level executives over lending and securitization activities that contributed to the housing and financial 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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