{"id":5162,"date":"2011-06-18T00:00:00","date_gmt":"2011-06-18T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2011\/06\/jp_morgan_settles_for_1536m_se"},"modified":"2022-04-04T13:36:16","modified_gmt":"2022-04-04T18:36:16","slug":"jp-morgan-settles-for-1536m-se","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/jp-morgan-settles-for-1536m-se\/","title":{"rendered":"JP Morgan Settles for $153.6M SEC Charges Over Its Marketing of Synthetic Collateralized Debt Obligation"},"content":{"rendered":"

J.P. Morgan Securities LLC (JPM)<\/a> has consented to pay $153.6 million to settle Securities and Exchange Commission charges that it misled investors in 2007 when it marketed a synthetic collateralized debt obligation<\/a> that was linked to the US housing market. The financial firm also agreed to a permanent bar from future violations of the 1933 Securities Act and to bettering its business practices related to mortgage securities transactions. By agreeing to settle, JP Morgan is not denying or admitting to the allegations. The settlement, however, should allow investors to get a \u201cfull return\u201d on their losses.<\/p>\n

The SEC says that the brokerage firm mainly used credit default swaps that referenced other CDO securities tied to the housing market to structure the Squared CDO 2007-1. While the CDO\u2019s marketing collateral said that GSCP, GSC Capital Corp.\u2019s investment advisory arm, chose the deal\u2019s investment portfolio, investors were not notified that hedge fund Magnetar Capital LLC played a key part in choosing the portfolio\u2019s CDOs and or that it would benefit if the CDO assets defaulted.<\/p>\n

The Commission also claims that when JP Morgan discovered in early 2007 that it could sustain huge losses because the housing market was in peril, it started marketing the deal to investors outside its regular client base. Less than a year later, the securities had lost the majority, if not all, of their value.<\/p>\n

The SEC\u2019s complaint accuses the investment bank of selling approximately $150 million of \u201cmezzanine notes\u201d of the Squared deal to over a dozen institutional investors who consequently lost their investments. Also, when the Squared deal was shut in May 2007, Magnetar\u2019s short position was $600 million while its long position was $8.9 million.<\/p>\n

J.P. Morgan to Pay $153.6 Million to Settle SEC Charges of Misleading Investors in CDO Tied to U.S. Housing Market<\/a>, SEC, June 21, 2011<\/p>\n

More Blog Posts:
\nWashington Mutual Bank Bondholders\u2019 Securities Fraud Lawsuit Against J.P. Morgan Chase & Co. is Revived by Appeals Court<\/a>, Institutional Investor Securities Blog, June 29, 2011<\/p>\n

National Credit Union Administration Board Files $800M Mortgage-Backed Securities Fraud Lawsuits Against JP Morgan Securities, RBS Securities, and Other Financial Institutions<\/a>, Institutional Investor Securities Blog, June 23, 2011<\/p>\n

JP Morgan Chase Agrees to Pay $861M to Lehman Brothers Trustee<\/a>, Stockbroker Fraud Blog, June 28, 2011<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

J.P. Morgan Securities LLC (JPM) has consented to pay $153.6 million to settle Securities and Exchange Commission charges that it misled investors in 2007 when it marketed a synthetic collateralized debt obligation that was linked to the US housing market. The financial firm also agreed to a permanent bar from future violations of the 1933 […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3742,3752,3757],"tags":[],"class_list":["post-5162","post","type-post","status-publish","format-standard","hentry","category-collateralized-debt-obligation","category-financial-firms","category-mortgagebacked-securities"],"yoast_head":"\nJP Morgan Settles for $153.6M SEC Charges Over Its Marketing of Synthetic Collateralized Debt Obligation — Investor Lawyers Blog — June 18, 2011<\/title>\n<meta name=\"description\" content=\"J.P. 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