In coordination with the federal-state Residential Mortgage-Backed Securities Working Group, the Securities and Exchange Commission today charged J.P. Morgan Securities (JPM) and Credit Suisse Securities (CS) with misleading investors in offerings of residential mortgage-backed securities. The firms agreed to settlements in which they will pay more than $400M combined, and the SEC plans to distribute the money to harmed investors. The SEC alleges that J.P. Morgan misstated information about the delinquency status of mortgage loans that provided collateral for an RMBS offering in which it was the underwriter. J.P. Morgan has agreed to pay $296.9M to settle the SEC's charges. According to the SEC's order against Credit Suisse, the firm similarly failed to accurately disclose its practice of retaining cash for itself from the settlement of claims against mortgage loan originators for problems with loans that Credit Suisse had sold into RMBS trusts and no longer owned. Credit Suisse has agreed to pay $120M to settle the SEC's charges.
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