JP Morgan

JPMorgan Sued for $228 Million by Principal Life Insurance

On March 1, 2012, Principal Life Insurance Company filed a summons with notice in New York state court against JPMorgan Chase and related entities.  Principal alleges that it purchased $114 million in RMBS from JPMorgan, and that the offering documents in connection with the sales of those securities contained material misstatements and omissions.  The summons asserts claims for common-law fraud, fraudulent inducement, negligent misrepresentation, aiding and abetting fraud, declaratory judgment, and breach of contract.  Principal is seeking approximately $228 million in damages, including punitive damages, and alternatively seeks rescission.  Summons.

Wall Street Firms Disclose Government Investigations Of RMBS Activities

Bank of America, Citigroup, Wells Fargo, JP Morgan, and Goldman Sachs announced in their respective 2011 Forms 10-K filed with the SEC that they have received requests and subpoenas seeking documents, testimony and other information from government regulators including the SEC, DOJ Civil Division, state attorneys general, and bank regulators. These requests and subpoenas appear to be focused on issues relating to the sale and offering of mortgage-backed securities. Goldman Sachs, JP Morgan, and Wells Fargo also acknowledged that they have received Wells notices advising them of possible SEC civil or administrative action.  Bank of America.  Citigroup.  Wells Fargo.  JP Morgan.  Goldman Sachs.

RMBS Claims Against JP Morgan Dismissed for Lack of Standing

On December 13, 2011, Judge Korman of the Eastern District of New York granted in part a motion to dismiss a putative class action accusing JP Morgan affiliates of misrepresentations and omissions in connection with $36.8 billion worth of mortgage-backed securities. Judge Korman ruled that the lead plaintiff lacked Article III standing to assert claims in connection with any certificates other than those in the specific tranches of the specific securitizations in which the lead plaintiff had purchased certificates. As to certain of those offerings, the Court further dismissed plaintiffs’ claims as to those certificates for which the lead plaintiff failed to allege that the certificates had been either bought directly from a defendant or purchased in initial public offerings. As to those certificates for which plaintiffs were permitted to proceed, the Court further dismissed without prejudice plaintiffs’ claims insofar as they related to alleged misstatements concerning credit enhancements and credit ratings. However, the Court allowed plaintiffs’ claims related to alleged misstatements concerning appraisal practices and the underwriting guidelines of certain originators to proceed. As to all issues on which the Court granted defendants’ motion other than Article III standing, the Court granted plaintiffs leave to replead. Order.

German Banks Sue Bank of America, JP Morgan and Others for Over $4.5 Billion

On September 29, 2011 two German banks, Landesbank Sachsen AG and Landesbank Baden-Wurttemberg, and the banks’ Irish asset manager, Sealink, filed three suits in New York state court. Plaintiffs name Bank of America Corp., JP Morgan, Countrywide Financial Corp., Bear Stearns, Washington Mutual, and certain Countrywide executives in claims for fraudulent and negligent misrepresentation, aiding and abetting, and vicarious and successor liability. Plaintiffs allege that the defendants concealed the risks of the underlying mortgages through alleged misstatements as to originator underwriting practices and allegedly overstated appraisals. Plaintiffs seek compensatory, rescissory, and punitive damages. Index No. 652680/2011. Index No. 652681/2011. Index No. 652679/2011.

HSH Nordbank Files Suit Against JP Morgan Chase for $42 Million in Damages

On August 31, 2011, HSH Nordbank AG filed a summons in New York State Supreme Court against JP Morgan and affiliated entities in connection with the sale of $159 million in five RMBS transactions. In its summons, HSH Nordbank alleges that, in the offering materials for each securitization, JP Morgan Chase made material misrepresentations and omissions regarding the underwriting standards used to originate the loans, loan-to-value ratios of the loans, and percentage of owner-occupied properties. HSH Nordbank seeks a minimum of $42 million in damages. Summons.

National Credit Union Administration Sues JP Morgan, RBS In Connection With Over $800 Million In RMBS

On June 20, 2011, National Credit Union Administration, acting as the liquidating agent for five now-defunct credit unions, filed two separate lawsuits against JP Morgan and Royal Bank of Scotland, and various other depositors and issuers, in the U.S. District Court for the District of Kansas. The NCUA brings claims under Section 11 and 12(a)(2) of the Federal Securities Act as well as under the state securities laws of Kansas, Illinois, Texas and California. NCUA alleges that defendants misrepresented the risks associated with the sale of hundreds of RMBS, including in connection with representations concerning underwriting guidelines, loan-to-value ratios and credit enhancements, which caused the credit unions who bought the RMBS to suffer “unprecedented” losses. The NCUA is seeking $800 million dollars from the defendants. NCUA Compl. vs. JPM. NCUA Compl. vs. RBS.

JP Morgan Settles with the SEC for $154 Million Over CDO Disclosures

On June 21, 2011, the SEC announced that JP Morgan Chase & Co. agreed to pay $153.6 million in disgorgement and penalties to settle claims brought by the SEC in the Southern District of New York. The SEC alleged that JP Morgan structured and marketed a $1.1 billion collateralized debt obligation and failed to disclose that the hedge fund, Magnetar Capital LLC, whose economic interests allegedly were adverse to the CDO’s investors, played a significant role in the portfolio selection process with the knowledge of JP Morgan. According to the SEC, while participating in the selection of the investment portfolio, Magnetar shorted $600 million of the assets it helped to select. The SEC also filed a separate complaint against Edward Steffelin, the head of the registered investment advisory firm that the offering documents represented would select the investments in the portfolio. Steffelin has not settled. JPM Settlement Announcement. JPM Compl. Steffelin Compl.

Allstate Sues Merrill Lynch and Credit Suisse for Fraud

On February 28, 2011, Allstate Insurance, represented by Quinn Emanuel, filed complaints against Merrill Lynch and Credit Suisse affiliated entities in New York state court in connection with Allstate’s purchase of RMBS from those entities. The complaints follow similar complaints by Allstate against JP Morgan, Washington Mutual, Bear Stearns, Citigroup, and Deutsche Bank entities. The complaints allege that defendants fraudulently misrepresented the quality of the loans underlying the RMBS they underwrote and sold to plaintiff. Both complaints allege causes of action for common law fraud, fraudulent inducement, and negligent misrepresentation. The complaint against Merrill Lynch also adds claims for violations of Sections 11, 12(a)(2), and 15 of the ’33 Act. Allstate purchased over $167 million in RMBS from Merrill Lynch and over $231 million from Credit Suisse. CS Complaint. Merrill Complaint.

Allstate Sues JP Morgan, Washington Mutual, Bear Stearns, Citigroup, and Deutsche Bank for Fraud

On February 18, 2011, Allstate Insurance filed complaints against Citigroup- and Deutsche Bank-affiliated entities in New York state court. Two days earlier, Allstate filed a similar complaint in the same court against a number of JP Morgan, Washington Mutual, and Bear Stearns entities. The three complaints each allege that defendants fraudulently misrepresented the quality of the loans underlying the RMBS they underwrote and sold to plaintiff. Allstate brings causes of action for negligent misrepresentation and common law fraud in all three actions and for violations of Sections 11 and 12(a)(2) of the ’33 Act against JP Morgan and Citigroup but not Deutsche Bank. Allstate purchased over $200 million in RMBS from Citigroup, over $185 million from Deutsche Bank, and over $750 million from JP Morgan. Complaint Against Citigroup. Complaint Against Deutsche Bank.

Allstate Sues JP Morgan, WaMu and Bear Stearns Over Sale of RMBS

On February 16, 2011, several Allstate Insurance entities filed a complaint against a number of JP Morgan, Washington Mutual and Bear Stearns entities and certain Washington Mutual directors and officers in the Southern District of New York. Plaintiffs allege that defendants misrepresented the quality of the loans underlying over $757 million in RMBS they sold to Allstate. Allstate is represented by the Quinn Emanuel firm. Complaint.