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JPMorgan Chase’s Mortgage Securities Settlement Opens the Door to Litigation

JPMorgan Chase, the largest bank in the United States, settled a U.S. Department of Justice claim for $13 billion dollars. The amount is one half of JPMorgan Chase’s annual profit and the largest settlement paid to the U.S. government. Along with the settlement, JPMorgan Chase made a statement which sets forth the reasons it made the settlement. According to an expert in securities lawsuits, the statement opens the door to new legal actions.

JPMorgan Chase’s Statement

JP Morgan Chase admitted in its statement that its employees and subsidiaries acted improperly. The essence of the statement is that the bank:

  • Received information that some of its mortgage-backed securities (sold between 2005-2008 before the 2008 mortgage crisis) did not meet the underwriting guidelines – making the securities “risky;”
  • The mortgage-backed securities were purchased in bundles;
  • One JPMorgan employee had noted in a letter that there were concerns about the risk of the mortgage-backed securities;
  • Another employee (from Bear Stearns) questioned whether some of the sellers of the mortgage-backed securities were reliable companies;
  • The employees and subsidiaries didn’t disclose the risky securities to investors; and,
  • The investors were harmed by the securities – many of which weren’t worth what the investors reasonably thought.

Effect of the Statement

The  lawsuit against JPMorgan Chase is one of many the U.S. government is bringing against Wall Street firms for mortgage securities violations and violations involving pensions and health care fraud. The US Today reported that Elizabeth Nowicki, a former Securities and Exchange Commission attorney, said the candor in the statement was unprecedented. Ms. Nowicki said the statement would “certainly give encouragement to plaintiff attorneys.”

There already are some active cases against JPMorgan Chase based on its known risk factor of mortgage-backed securities. So far, attempts to get a quick dismissal of the claims have been denied. Jamie Dimon, the CEO of JPMorgan Chase, says that the statement doesn’t admit a violation of the law. Still, the statement will give guidance to plaintiff’s lawyers for new lawsuits.

If your organization or company was injured by improper mortgage-security investments made by JPMorgan Chase or any other company, you may have a legal claim. Please contact Cohen, Placitella and Roth for an evaluation: (888) 375-7600.

Half of small cars do poorly in IIHS crash test.

  The AP (8/8, Krisher) reports that six of 12 small cars tested by the Insurance Institute for Highway Safety performed well in front-end crash test. Only the two-door and four-door Honda Civil models earned “good” ratings with the Dodge Dart, Ford Focus, Hyundai Elantra and Scion tC receiving “acceptable” ratings. Meanwhile, the Chevrolet CruzeContinue Reading

The BP Settlement: How the Lawyers See Their Role

  To the Editor:   Re “Lawyers’ Business Model,” by Joe Nocera (column, July 30)   When corporations act irresponsibly by producing unsafe products, polluting our environment or swindling their employees and shareholders, often the only place for Americans to hold them accountable is in our courts. The civil justice system provides a key incentiveContinue Reading

T.G.I. Fridays Owner To Pay $500K To Settle Liquor-Scam Allegations

  A T.G.I. Fridays franchisee has agreed to pay $500,000 to settle New Jersey state regulators' claims that it sold cheap liquor masquerading as high-end brands. Briad Restaurant Group, of Livingston, will not contest allegations that it violated Division of Alcoholic Beverage Control rules, Acting Attorney General John Hoffman said Wednesday in announcing the settlement.Continue Reading

The Need for Unions Lives On

Very interesting video from the NYT. http://www.nytimes.com/video/2013/07/15/opinion/100000002338213/occupy-bakery.html?nl=todaysheadlines&emc=edit_th_20130717

Malala Yousafzai – One Person Can Make a Difference

The following post came from my good friend Matt Evantoff who is a communications and messaging expert. It is worth repeating here. “12 Lessons from the Best Speech of 2013: Malala and Public Speaking” Malala Yousafzai addressed the United Nations and delivered what can only be described as the best speech of 2013, as wellContinue Reading

Type 2 Diabetes Drugs Byetta and Januvia Prompt Investigation

    The U.S. Food and Drug Administration recently announced an investigation into reports that Type 2 diabetes drugs Januvia and Byetta are associated with an increased risk of developing pancreatic cancer. The FDA previously issued warnings related to these drugs over an increased risk of pancreatitis. Additionally, a recent study in JAMA's Internal MedicineContinue Reading

USA Votes LBI #2 Beach on East Coast

Just because everyone goes to the beach in summer doesn't mean you have to fight crowds to find a placid stretch of sand. From Maine to Florida, here are 10 spots where you can savor the shore without so much company. Playalinda Beach, Florida Florida's beaches have a well-deserved reputation for being some of theContinue Reading

Some Sunscreens Can Cause Unexpected & Severe Burns

FDA issues warning on flammable sunscreens. WRC-TV Washington (7/5, Petitte) on its website reports that in a consumer update issued Wednesday, the Food and Drug Administration cautioned that some sunscreen sprays “could be flammable.” The FDA “says five people have been burned while wearing Banana Boat sunscreen sprays,” all of which have now been “recalled,Continue Reading

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