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New York

Fed task force sues JPMorgan Chase, alleging mortgage-backed securities fraud

JPMorgan Chase''s Jamie Dimon and Eric Schneiderman
JPMorgan Chase''s Jamie Dimon and Eric Schneiderman

The federal task force set up to address mortgage-backed security fraud filed a suit against Bear Stearns & Co., now a unit of JPMorgan Chase, alleging widespread, institution-wide misconduct in the packaging and selling of mortgage securities during the boom.

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The suit was filed by New York State Attorney General Eric Schneiderman, the co-chairman of the task force; it alleges that Bear Stearns made material misrepresentations about the quality of the securities and ignored evidence of the problems with the loans they packaged and sold to investors.

Schneiderman’s suit is more widespread than those filed by the Securities Exchange Commission; it focuses on the unit, rather than a specific deal. [NYT] — Jane C. Timm