In coordination with the federal-state Residential Mortgage-Backed Securities Working Group, the Securities and Exchange Commission recently charged J.P. Morgan Securities LLC and Credit Suisse Securities (USA) with misleading investors in offerings of residential mortgage-backed securities. The firms agreed to settlements in which they will pay more than $400 million combined, and the SEC plans to distribute the money to harmed investors.
The SEC alleges that J.P. Morgan misstated information about the delinquency status of mortgage loans that provided collateral for a residential mortgage-backed securities offering in which it was the underwriter. J.P. Morgan received fees of more than $2.7 million, and investors sustained losses of at least $37 million on undisclosed delinquent loans.
J.P. Morgan has agreed to pay $296.9 million to settle the SEC’s charges.
According to the SEC’s order against Credit Suisse, Credit Suisse similarly failed to accurately disclose its practice of retaining cash for itself from the settlement of claims against mortgage loan originators for problems with loans that Credit Suisse had sold into residential mortgage-backed securities trusts and no longer owned. Credit Suisse also made misstatements in SEC filings about when it would repurchase mortgage loans from trusts if borrowers missed the first payment due. The firm made $55.7 million in profits and losses avoided from its bulk settlement practice, and its investors lost more than $10 million due to Credit Suisse’s practices concerning first payment defaults.
Credit Suisse has agreed to pay $120 million to settle the SEC’s charges.
The foregoing information, which is publicly available on the SEC’s website, is being provided by The White Law Group. The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com. For the full version on the SEC’s announcement of the penalties assessed against J.P. Morgan and Credit Suisse, visit http://sec.gov/news/digest/2012/dig111612.htm.