Tuesday, June 21, 2011

SEC Press Release: JP Morgan Fined in Connect with CDOs


J.P. Morgan to Pay $153.6 Million to Settle SEC Charges of Misleading Investors in CDO Tied to U.S. Housing Market

The U.S. Securities and Exchange Commission (SEC) issued a press release today announcing that
J.P. Morgan Securities LLC will pay $153.6 million to settle SEC charges that it misled investors in a complex mortgage securities transaction just as the housing market was starting to plummet. Under the settlement, harmed investors will receive all of their money back.
The SEC alleges that J.P. Morgan did not inform investors that the CDOs sold to the investors were selected in part by a hedge fund that acted as the counterparty to the investors. If the CDOs defaulted, the investors stood to lose while the hedge fund stood to gain financially. Here is SEC’s Complaint v. J.P. Morgan Securities LLC.

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