JPMorgan Chase disclosed on Wednesday that it
faces a criminal and civil probe over whether the bank sold risky mortgage-backed securitiesto investors before the financial crisis, reports New York Times DealBook.
In a quarterly regulatory filing, the bank said a civil division of the US attorney’s office has “preliminarily concluded” that JPM violated federal laws when it hawked subprime securities from 2005 to 2007.
There’s also a parallel criminal inquiry “in a more preliminary stage,” according to DealBook.
A representative from JPMorgan declined to comment.
Another massive problem for JPM here is that the Justice Department is piling onto a bunch of other probes. Attorneys General and prosecutors in California, New York, and Pennsylvania are all carrying out their own investigations.
The move comes at a time when the Obama administration is ratcheting up efforts to bring America’s banks to court over dangerous practices during the run-up to the financial crisis.
On Tuesday, the Justice Department and the SEC accused JPM’s contemporary, Bank of America, of similar transgressions — exaggerating the quality of the mortgage loan pool backing $US850 million in securities.
JPM, the largest U.S. bank by assets, recently ran afoul of energy regulators over alleged market manipulation. The bank agreed to a $US410 million settlement.