SEC v. J.P. Morgan Securities LLC, EMC Mortgage, LLC, Bear Stearns Asset Backed Securities I, LLC, Structured Asset Mortgage Investments II, Inc., SACO I, Inc., and J.P. Morgan Acceptance Corporation I, Case No. 1:12-cv-01872 RLW(D.D.C.). On November 16, 2012, the SEC announced it charged J.P. Morgan Securities LLC and affiliated entities with misleading investors in offerings of residential mortgage-backed securities (“RMBS”). The SEC alleged that JP Morgan provided the public with inaccurate information about the delinquency status of mortgage loans that served as collateral for an RMBS offering. JP Morgan received fees of more than $2.7 million, and investors sustained losses of at least $37 million on undisclosed delinquent loans. The SEC also charged JP Morgan for Bear Stearns’ failure to disclose that it obtained cash settlements from mortgage loan originators on problem loans that Bear Stearns had sold into RMBS trusts. The proceeds from this bulk settlement practice were at least $137.8 million.
Without admitting or denying the allegations, JP Morgan and J.P. Morgan Acceptance Corporation I settled with the SEC by agreeing to pay disgorgement of $39,900,000, prejudgment interest of $10,600,000, and a civil monetary penalty of $24,000,000 for the delinquency misstatements. JP Morgan; EMC Mortgage, LLC; Bear Stearns Asset Backed Securities I, LLC; Structured Asset Mortgage Investments II, Inc.; and SACO I, Inc. agreed to pay disgorgement of $137,800,000, prejudgment interest of $24,265,536, and a civil monetary penalty of $60,350,000 for the bulk settlement practice conduct. The SEC plans to distribute settlement proceeds to injured investors. The Defendants also consented to the entry of a final judgment permanently enjoining them from violating Section 17(a)(2) and (3) of the Securities Act.