[JURIST] JPMorgan Chase & Co [corporate website] reached a $153.6 million settlement [text, PDF; press release] Tuesday for fraud charges brought by the US Securities and Exchange Commissionn(SEC) [official website] for allegedly misleading investors during the housing crisis. A settlement was reached when JPMorgan agreed to pay [Reuters report] a $133 million fine, in addition to $20.6 million for fraudulent profits and interest. This settlement is one of the most significant lawsuits against Wall Street for its role in the mortgage crisis. The press release stated:
The SEC alleges that J.P. Morgan structured and marketed a synthetic collateralized debt obligation (CDO) without informing investors that a hedge fund helped select the assets in the CDO portfolio and had a short position in more than half of those assets. As a result, the hedge fund was poised to benefit if the CDO assets it was selecting for the portfolio defaulted.
At this time, no individual bankers are being charged in the JPMorgan case.
In July 2010, Goldman Sachs [corporate website; JURIST news archive] agreed to a $550 million settlement [text, PDF] with the SEC to resolve charges [JURIST report] that they marketed a subprime mortgage product and made misleading statements and omissions to investors in early 2007. Of the $550 million settlement, $300 million will be paid to the US Treasury and $250 million will be distributed to harmed investors. The penalty was the largest against a financial company in SEC history. In May 2010, Lehman Brothers Holdings [corporate website] filed suit [complaint, PDF; JURIST report] against JPMorgan for allegedly “siphoning” off billions of dollars in “critically-needed” assets days before the investment bank filed for a record-breaking bankruptcy.