Schneiderman sues JPMorgan over Bear Sterns' actions

John O'Brien Oct. 2, 2012, 10:24am


NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman has reportedly filed a lawsuit against JPMorgan Chase & Co. over its alleged role in the financial crisis.

Reuters reported that Schneiderman file his lawsuit Monday over mortgage-backed securities sold by Bear Sterns, which was purchased by JPMorgan in 2008. Schneiderman's lawsuit is the result of a group created by President Barack Obama to probe the financial crisis.

The lawsuit was filed in New York state Supreme Court.

"The NYAG civil action relates to Bear Stearns, which we acquired over the course of a weekend at the behest of the U.S. Government. This complaint is entirely about historic conduct by that entity," a statement provided to Reuters said.

Two of Bear Sterns' subprime hedge funds lost most of their value in 2007. The company's 2007 third-quarter profit dropped 61 percent, and in the aftermath was purchased by JPMorgan.

JPMorgan purchased Bear Sterns for $10 a share. At one point in 2007, Bear Sterns had traded at $172 a share.

Schneiderman accused Bear Sterns of failing to ensure the quality of its loans, Reuters reported. Other members of Obama's group are the Justice Department, the Securities and Exchange Commission, the Department of Housing and Urban Development and the Internal Revenue Service, the report said.

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