A group that includes asset management companies Blackrock and Neuberger Berman is seeking a settlement of at least $US5.75 billion from JP Morgan in an attempt to recover losses on mortgage-backed securities sold before the financial crisis, the Wall Street Journal reports.
This is separate from the $US13 billion fine the bank will be paying for failing to warn investors about risks in mortgage backed securities trades.
The same investor group also extracted an $US8.5 billion settlement from Bank of America, to compensate investors for mortgage bonds they issued before the collapse of the housing market. That settlement is now before a judge for final approval.
J.P. Morgan has been prepared for this payout since the last quarter, as it set aside over $US9 billion to cover its legal fees. According to the Wall Street Journal, it has now set aside a $US23 billion to cover future legal costs.
The bank is also still on the hook for criminal liability related to its mortgage business. The charges bring into question whether JPMorgan misrepresented the quality of the mortgages it securitizing and selling to investors.