New York Attorney General Eric Schneiderman is suing JPMorgan Chase alleging that the Bear Stearns unit the bank took over during the height of the financial crisis defrauded mortgage bond investors, according to a complaint [via Thompson Reuters].
The complaint alleges that the Bear Stearns unit defrauded investors from 2005 to 2007 by packaging and selling mortgage-backed securities they knew, or should have known, were highly likely to default.
As a result, investors lost about $22.5 billion on mortgage-backed securities sold by the Bear Stearns unit in 2006 and 2007, the complaint said.
What’s more is according to the complaint, one of the residential mortgage-backed securitizations was referred to in an internal email as a “SACK OF S***” and a “s*** breather.”
Check out the excerpt from page 11.
Reuters’ Karen Freifeld reports that JPMorgan will not contest the allegations.
“The NYAG civil action relates to Bear Stearns, which we acquired over the course of a weekend at the behest of the U.S. Government. This complaint is entirely about historic conduct by that entity,” the bank said in a statement.