JPMorgan Chase & Co. (NYSE:JPM), the largest bank in the United States in terms of assets said that federal authorities started their civil and criminal investigation related to the bank’s mortgage-backed securities (MBS) offerings from 2005 to 2007.


JPMorgan Chase & Co. (NYSE:JPM) regulatory filing

In a  regulatory filing with the Securities and Exchange Commission (SEC), JPMorgan indicated that the civil and criminal divisions of the U.S. Attorney General’s Office for the Eastern District of California were conducting inquiries regarding its MBS offerings prior to the housing crisis in 2008.

JPMorgan Chase & Co. (NYSE:JPM) wrote, “In May 2013, the Firm received a notice from Civil Division stating that it has preliminarily concluded that the Firm violated certain federal securities laws in connection with its subprime and Alt-A residential MBS offerings during 2005 to 2007.”

The bank added that federal and state authorities issued subpoenas and informal requests for information regarding the bank’s origination and purchase of whole loans, underwritings, issuance and trading of MBS, as well as other related issues. Regulators are investigating whether JPMorgan Chase & Co.(NYSE:JPM) fully disclosed information about its securities sales, and if the bank violated securitization representations and warranties.

JPMorgan Chase & Co. (NYSE:JPM) said it continues to cooperate with authorities related to their MBS-related investigations.

The bank also disclosed in its regulatory filing that it is facing two class action lawsuits against it in connection with its mortgage foreclosure arrangements. JPMorgan Chase & Co. (NYSE:JPM) filed a motion to dismiss an amended complaint in one of the cases. In the other case, the complainant filed for class certification.

JPMorgan Chase & Co. (NYSE:JPM) further revealed that the Attorney General in Massachusetts and New York filed separate charges against the bank for allegedly committing wrongdoings in mortgage assignments. The bank settled the case file with the Attorney General in New York. On the other hand, the court granted in part and denied in part its motion to dismiss the Massachusetts case.

Meanwhile, the Department of Justice (DOJ) and the SEC filed a complaint against Bank of America (NYSE:BAC) for allegedly defrauding investors related to MBS worth $850 million. The DOJ said the bank misinformed investors regarding the risks related to residential mortgage- backed securities, while the SEC said the Bank of America withheld vital information that impacted investor returns.