Legal
Credit Suisse, JP Morgan Settle With SEC Over Sale Of Mortgage Bond Sales
JP Morgan and Credit Suisse will pay a combined $417 million to settle US civil charges for misleading investors over the sale of risky mortgage bonds prior to the 2008 financial crisis.
JP Morgan will pay $297 million, while Credit Suisse will pay $120 million in another case, with the money going to affected investors, the US Securities and Exchange Commission is reported to have said.
In a statement on Friday, Credit Suisse said it had reached a settlement with the SEC over sale of mortgage-backed securities.
"In a settled administrative proceeding filed today [16 November], the SEC charged Credit Suisse with engaging in negligent conduct but not in any intentional or reckless wrongdoing. Credit Suisse neither admits nor denies the SEC’s allegations. As part of the settlement, Credit Suisse has agreed to pay $120 million which was recorded in the third quarter of 2012 as a litigation provision," the Zurich-listed bank said in a statement.
"Today’s announcement resolves an investigation relating to Credit Suisse’s settlement of claims against mortgage originators involving loans that had been included in a number of Credit Suisse securitisations. It also resolves an investigation relating to Credit Suisse’s obligations to demand repurchase by mortgage originators with respect to certain delinquent loans in two 2006 securitisations," it said.
"The SEC has advised that its investigation relating to Credit Suisse’s due diligence and corresponding disclosures on historic RMBS transactions will not be pursued," Credit Suisse added.
JP Morgan, meanwhile, said in a statement last Friday that it has settled with the SEC over sale of residential mortgage backed securities concerning offerings issued by Bear Stearns - the business it bought four years ago - and one by JP Morgan.
"As part of the agreement, JP Morgan Securities and the other settling entities consented to the filing of a complaint, without admitting or denying its allegations, and will pay disgorgement and penalties totalling approximately $297 million," the US bank said.
"More than two-thirds of these payments relate to securities issued by Bear Stearns and are slated for return to the trusts Bear sponsored or the investors in those trusts. The SEC's complaint makes allegations under the negligence-based provisions of the federal securities laws and does not include charges of intentional misconduct," it said.
