The Securities & Exchange Commission (SEC) accused JPMorgan Chase & Co.'s Wall Street division of securities fraud for selling mortgage-backed securities that were doomed to fail. JP Morgan has agreed to pay a $153.6 million settlement, but has neither admitted nor denied the charges.
The security, known as Squared CDO 2007-1, was sold to investors in 2007, just before the decline of the housing market. The security was backed by a hedge fund involved with residential mortgages in the US. Allegedly, the hedge fund had an interest in seeing the investment fail. JPMorgan Chase & Co. did not inform investors of the role played by the hedge fund.
Robert Khumazi, director of enforcement for the SEC, stated, "By failing to disclose this, we allege that JP Morgan acted negligently, in violation of securities laws."
Of the money paid in the settlement, the majority will go to victims of the Squared 2007-1 investment, including the nonprofit Thrivent Financial for Lutherans.
If you, too, have been the victim of securities fraud and need answers, contact an experienced securities fraud lawyer with David P. Meyer & Associates today at (800) 738-1960. We are experienced FINRA arbitration attorneys and would be happy to answer any questions you might have.