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JP Morgan agrees €107m settlement over fraud charges

The bank was accused of not telling customers that a hedge fund had chosen some assets in a major securities deal.

Image: Bebeto Matthews/AP

JPMORGAN CHASE is to  pay €107m to settle civil fraud charges, after claims it mislead investors into purchasing complex mortgage securities just before the housing market collapsed.

The settlement with the Securities and Exchange Commission, announced today, is one of the most significant legal actions targeting Wall Street’s role in the 2008 financial crisis.

As part of the settlement, investors who were harmed will receive all of their money back.

JPMorgan also agreed to improve the way it reviews and approves mortgage securities transactions. The bank neither admitted nor denied wrongdoing.

Regulators have been investigating a number of major banks and more charges are expected.

The SEC also charged Edward Steffelin, who headed the team at an investment firm involved in the selection of mortgage securities.

In a lawsuit filed in Manhattan, the SEC said JPMorgan allowed the Magnetar Capital hedge fund to improperly choose assets for a big mortgage securities deal.

JPMorgan failed to disclose to investors that Magnetar played a big role in choosing the securities and stood to benefit if they defaulted, the SEC said.


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