Investors Recover $388 Million in JP Morgan MBS Class Action
After six years of intense litigation, the lead plaintiffs and court-appointed class representatives of Laborers Pension Trust Fund for Northern California and Construction Laborers Pension Trust for Southern California recovered hundreds of millions of dollars regarding nine 2007 residential mortgage-backed securities (MBS) offerings issued by JPMorgan Chase & Co. This brings near closure to one of the last remaining MBS purchaser class actions arising out of the global financial crisis. The law firm Robbins Geller Rudman & Dowd LLP helped recover US$ 388 million in the case for investors. On a percentage basis, the settlement represents one of the largest recovered in any of the 16 comparable MBS purchaser class action settlements obtained to date.
On a percentage basis, the settlement represents one of the largest recovered in any of the 16 comparable MBS purchaser class action settlements obtained to date.
The suit was initially pushed by the US$ 2.1 billion Fort Worth Employees’ Retirement Fund. The investors claimed JP Morgan misled them about the risks (credit quality of home loans) of US$ 10 billion worth of residential MBS. After the demise of investment bank Lehman Brothers, the MBS certificates were worth 62 cents or less on the dollar.
JP Morgan denied wrongdoing as part of the accord. The bank argued the underperformance of the investments were due to the economic downturn rather than the specific assets in the portfolio.
The case is Fort Worth Employees’ Retirement Fund v. J.P. Morgan Chase & Co., 09-cv-3701, U.S. District Court, Southern District of New York.
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