JPMorgan Securities has agreed to pay $153.6m to settle civil fraud charges against it for misleading buyers of complex mortgage securities investments during the collapse of the housing market, it was announced late on Tuesday.
The SEC found that JPMorgan did not correctly disclose to investors that the vehicle had been created on behalf of hedge fund, Magnetar, and the role it played, namely that it was involved in picking CDOs for the portfolio and “stood to benefit if the CDO defaulted”. Under the settlement with the SEC, JPMorgan agreed to improve the manner it reviews and approves transactions relating to mortgage securities.
Head of the SECs enforcement, Robert Khuzami, said: “The settlement ensures harmed investors receive a full return of the losses they suffered.” A JPMorgan statement said, it was pleased “to put this matter concerning certain 2007 disclosures behind us,” and added the SEC has not charged the bank with “intentional or reckless misconduct”.
