Jessica M. Karmasek Apr. 9, 2013, 8:15pm
NEW YORK (Legal Newsline) -- New York Attorney General Eric Schneiderman, in a court filing last week, defended his lawsuit against JPMorgan over its residential mortgage-backed securities.
In October, Schneiderman, in his role as co-chair of the Residential Mortgage-Backed Securities Working Group, sued JPMorgan Securities LLC -- formerly known as Bear Stearns and Co. Inc. -- JPMorgan Chase Bank NA and EMC Mortgage LLC.
The lawsuit was filed in New York state Supreme Court.
According to Schneiderman's lawsuit, the defendants deceived investors as to the "care with which they evaluated the quality" of mortgage loans packaged into residential mortgage-backed securities prior to Bear Stearns and Co.'s collapse in early 2008, incurring losses that have totaled about $22.5 billion to date.
The attorney general, in a filing Friday in the New York state Supreme Court, opposed the bank's motion to dismiss.
JPMorgan argues that Schneiderman's suit was brought too late and is "defective."
However, the attorney general contends that under the state's Martin Act he has six years -- not three years -- to file investor fraud claims.
He also argues that his complaint "more than adequately" put the bank on notice "of the fraudulent practices for which the attorney general seeks relief."
Schneiderman's suit against JPMorgan is the first legal action from the RMBS Working Group, which was created by President Barack Obama and operates as part of the federal government's Financial Fraud Enforcement Task Force.
The working group, formed last year, brings together federal, state and local agencies, including the U.S. Department of Housing and Urban Development, FBI, IRS, the Consumer Financial Protection Bureau, the Financial Crimes Enforcement Network and the Federal Housing Finance Agency Office of Inspector General.
The group is tasked with investigating those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities.
"This lawsuit will bring accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy," Schneiderman said in October.
"Our lawsuit demonstrates that there is one set of rules for all -- no matter how big or powerful the institution may be -- and that those rules will be enforced vigorously."
The attorney general called the JPMorgan suit a "workable template" for future actions against insurers of residential mortgage-backed securities that defrauded investors and cost millions of Americans their homes.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.