The New York Attorney General sued JPMorgan Chase on Monday,
alleging that Bear Stearns, the troubled investment bank it bought in 2008,
"kept investors in the dark" about the quality of the mortgage-backed
bonds it was selling as the market started to sour, according to a report in HuffPo.
The lawsuit is the first legal action against a Wall Street
bank to come from a joint federal and state task force announced by President
Barack Obama during his State of the Union address in January. It alleges civil
fraud violations, which means that potential penalties will be measured in
dollars, not jail terms. Nevertheless, the JPMorgan Chase lawsuit qualifies as
one of the more significant actions taken by a law enforcement agency to date
against a Wall Street bank.
JPMorgan Chase acquired Bear Stearns in March 2008 in a deal
brokered and supported by the federal government.
According to the lawsuit, filed in Manhattan federal
district court, Bear promised a "robust and intensive" review process
for selecting loans for sale to investors. But Bear didn't do that,….
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