Two major Wall Street banks have agreed to pay more than $400 million to settle cases brought by the U.S. Securities and Exchange Commission in connection with residential mortgage-backed securities.
JPMorgan Chase & Co. agreed to pay $297 million while Credit Suisse agreed to pay $120 million to settle the SEC's claims, which the agency announced Friday.
The SEC's cases stem from allegations that the banks misled investors. The SEC claims JPMorgan misstated the delinquency status of the underlying residential mortgages bundled into its residential mortgage-backed securities (RMBS) bonds.
â€œIn many ways, mortgage products such as RMBS were ground zero in the financial crisis,â€ Robert Khuzami, director of the SECâ€™s Division of Enforcement, said in a statement. â€œMisrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed."
Khuzami is co-chair of a working group of federal and state law enforcement tasked with pursuing cases stemming from the causes of the financial crisis. The working group also recently brought a separate case, its first, against JPMorgan related to Bear Stearns, which JPMorgan acquired in the financial crisis.
The banks did not admit or deny allegations as part of the settlement.
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