US starts criminal inquiry against JP Morgan over subprime sales
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Friday 09 August 2013
The US government is conducting both civil and criminal investigations into the way JP Morgan Chase sold certain mortgage-backed securities in the run up to the financial crisis, the bank has revealed.
The inquiries came to light in a regulatory filing by the bank. JP Morgan said the civil division of the US Justice Department had come to a preliminary conclusion that the bank violated federal civil laws in sales of subprime mortgage securities from 2005 to 2007. The investigations are being conducted by the US Attorney's Office in Eastern District of California.
The scrutiny is the latest legal headache for the bank, which has spent the past year trying to deal with the fallout from the so-called "London Whale" trading fiasco that triggered a loss of around $6bn (£4bn). The botched trades turned the spotlight on management practices at the giant American bank, the biggest in the country in terms of its assets.
Earlier this year, some shareholders called for the bank's chief executive, Jamie Dimon, to be stripped of his dual role as chairman. They were ultimately unsuccessful, however, with their proposal being defeated at the bank's annual meeting.
News of the parallel criminal and civil investigations into JP Morgan comes on the heels of a federal lawsuit against Bank of America over the sale of $850m worth of residential mortgage-backed securities.
Announcing the case against Bank of America, the US Attorney General, Eric Holder, said the US government would be aggressive with lenders as it looks over their actions in the run-up to the crisis.
"President Obama's Financial Fraud Enforcement Task Force will continue to take an aggressive approach to combating financial fraud and uncovering abuses in the residential mortgage-backed securities market," he said. "We will... use every tool, resource, and appropriate authority to ensure stability, accountability, and – above all – justice for those who have been victimised."
Bank of America, in its statement responding to the case, said the mortgages in question were of a higher quality, or "prime," and sold to sophisticated investors who had ample access to the underlying data". "We will demonstrate that," it added.
Arsenal 1 Everton 1: Substitute equalises with six minutes to go
food + drinkMichelin-starred Tom Sellers on being this year's hottest property
booksGeese, gorillas, grandads... and growing up
tvParents (and kids) rejoice! A new wave of fantastic family entertainment is here
food + drinkHow one grocery e-tailer is gearing up for the Yuletide rush
food + drink
Nelson Mandela: 11 inspirational quotes to live your life by
Queen to miss Nelson Mandela funeral over security and long-haul flight concerns
'Never a good time to increase MPs' pay': Jack Straw defends politicians' 11% pay rise in face of public outrage
10 stone five-year-old taken into care
Japan cracks down on leaks after scandal of Fukushima nuclear power plant
- 1 Hundreds arrested as Canadian police smash worldwide paedophile ring
- 2 Sherlock series 3: Benedict Cumberbatch and Martin Freeman provide teasers for the biggest comeback in British television
- 3 The man who made Femen: New film outs Victor Svyatski as the mastermind behind the protest group and its breast-baring stunts
- 4 Mass murder in the Middle East is funded by our friends the Saudis
- 5 Japan cracks down on leaks after scandal of Fukushima nuclear power plant
- < Previous
- Next >
iJobs Money & Business
£25000 - £50000 per annum + Benefits + Bonus: Harrington Starr: C++ Server Dev...
£300 - £350 per day: Harrington Starr: Leading Electronic Trading Software Ven...
£80000 - £100000 per annum + benefits + bonus: Harrington Starr: Project Manag...
£50000 - £60000 per annum + benefits + bonus: Harrington Starr: Business Analy...