In a relief to JPMorgan Chase & Co. (JPM), Bloomberg reported that the lawsuit filed by Syncora Guarantee Inc. has been dismissed. The lawsuit was filed in the New York state Supreme Court in Manhattan.
When filing the case in 2011, Syncora had accused JPMorgan of providing misleading information prior to signing the agreement concerning insuring interest and principal repayments related to the $666 million bond (GreenPoint Mortgage Funding Trust 2007-HE1) created in 2007, which was supported by 9,871 equity home loans. As a result, Syncora had to shell out more than $168.6 million in settling claims of the aggrieved parties.
In 2012, JPMorgan tried to dismiss the case by stating that Syncora had already filed litigation claims in the U.S. District Court. However, in May 2012, Justice Charles Ramos ruled out the company’s plea. Now, an appeals court in Manhattan has dismissed the case by reversing Justice Charles Ramos’s ruling.
In Jul 2012, Bank of America Corporation (BAC) agreed to pay $375 million to settle a lawsuit filed by Syncora over risky mortgage backed securities (:MBS). In 2009, Syncora had filed a case against BofA that bore similar charges as those leveled against JPMorgan.
Though the dismissal of the lawsuit is a relief for JPMorgan, the company still faces several lawsuits pertaining to the sale of risky MBS preceding the financial crisis. Additionally, in its latest quarterly filings, the company disclosed that the Department of Justice (:DOJ) and the Securities and Exchange Commission (:SEC) are investigating violation of several federal security laws during the sale of risky residential mortgage backed securities (RMBS) during 2005–2007.
Given this and several other cases, at the end of second-quarter 2013, JPMorgan increased its anticipated legal losses (exceeding its existing litigation reserves) to $6.8 billion from $6.0 billion in the prior quarter.
Currently, JPMorgan carries a Zacks Rank #3 (Hold). Other better performing major regional banks include BankUnited, Inc. (BKU) and The PNC Financial Services Group, Inc. (PNC). While BankUnited has a Zacks Rank #1 (Strong Buy), PNC Financial has a Zacks Rank #2 (Buy).
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