JPMorgan Chase & Co agrees on settlement to Pittsburgh bank lawsuit
JPMorgan Chase & Co has agreed to settle a case brought against it by a Pittsburgh bank over losses involving mortgage securities which could have revealed the draft complaint of the government covering the lender's $13 billion settlement with regulatory authorities, Bloomberg reported.
Federal Home Loan Bank of Pittsburgh lawyers disclosed the settlement today in a state court in Pennsylvania but did not give details about the agreement. JPMorgan was sued by the Pittsburgh lender in 2009 about the losses it incurred in mortgage-backed securities it bought from the bank in 2006 to 2007 worth $1.8 billion.
The report said the settlement came less than a month after JPMorgan ordered to hand over to plaintiff lawyers a draft of the proposed lawsuit by the US Justice Department that became the basis for the deal that resolved allegations about mortgage bond sales which officials claimed helped fuel the 2008 financial crisis.
Pittsburgh bank lawyers argued that the issues in its case were similar to those already tackled in the government settlement that was made known on November 19, 2013. They further argued that a more detailed account of the investigation would be found in the draft complaint and gave the name of a bank employee who assisted in the probe, the report said.
In November, the contents of the draft complaint were not disclosed. However, JPMorgan acknowledged the statement of facts for the settlement but did not admit any wrongdoing. The bank admitted that its subsidiaries securitized subprime and Alt-A mortgage loans for two years from 2005 to 2007 and then sold these mortgage-backed securities to investors but failed to inform them that loans did not meet standards for underwriting, the report said.
Names of specific employees, records or events were not provided in the statement. No details were also provided regarding the firm's vendors or loan programs.