NEW YORK (11/19/13)--JP Morgan reached a preliminary agreement on a $4.5 billion settlement with institutional investors who accuse the bank of misrepresenting 330 different mortgage-backed security trusts.
Representatives of the 21 investors said that they will back the deal, and will ask trustees--who can still ask a judge to approve of the settlement--to accept it. The terms of the settlement will be valid until Jan. 15, 2014, JP Morgan said in a Friday release.
The claims revolve around mortgage-backed securities sold by JP Morgan and Bear Stearns between 2005 and 2008. JP Morgan acquired Bear Stears in March 2008, as the firm flirted with bankruptcy.
Claims surrounding mortgage-backed security trusts sold by Washington Mutual--another institution acquired by JP Morgan amid the global financial meltdown, in September 2008--remain unsettled.
JP Morgan's recent spate of legal woes, alleged unethical practices and subsequent public image problems made headlines last week, when the bank launched a social media campaign that was hijacked and roundly mocked by social media users (News Now Nov. 15).
JP Morgan late Wednesday cancelled a Twitter live Q&A forum it had scheduled for Thursday under its #AskJPM Twitter hashtag when Twitter users began inundating the hashtag with the type of questions many banks--especially one that has been the target of several Justice Department investigations--wouldn't want to answer.