JPMorgan Pressured to Reveal $13 Billion Accord Complaint
By Sophia Pearson, Karen Gullo & Beth Hawkins - Nov 27, 2013 12:01 AM ET .
JPMorgan Chase & Co. (JPM) should turn over a draft complaint used as the lender negotiated a $13 billion deal to settle probes of its mortgage-bond sales and identify an employee who cooperated with the U.S. investigation, according to lawyers for a Pennsylvania bank.
The Federal Home Loan Bank of Pittsburgh, which claims its losses of more than $1 billion from JPMorgan mortgage-backed securities aren’t covered by the settlement, filed a request to force the New York-based company to comply with a judge’s order that it turn over the documents.
Attorneys for the Pittsburgh FHLB say the draft complaint may lead to the discovery of evidence that could be used in its own case against the bank.
State court Judge Stanton Wettick in Pittsburgh ordered JPMorgan in October to disclose drafts of a federal complaint, which an attorney for the bank said may have been turned over as part of the negotiations.
Lawyers for JPMorgan argued against such disclosure at an Oct. 17 hearing, according to a court transcript. The bank later moved to throw out the order.
Attorneys for the Pittsburgh FHLB say the draft complaint may lead to the discovery of evidence that could be used in its own case against the bank.
State court Judge Stanton Wettick in Pittsburgh ordered JPMorgan in October to disclose drafts of a federal complaint, which an attorney for the bank said may have been turned over as part of the negotiations.
Lawyers for JPMorgan argued against such disclosure at an Oct. 17 hearing, according to a court transcript. The bank later moved to throw out the order.
Full Disclosure
“JPMorgan also now attempts to stand in the shoes of the U.S. government and argues that the policy favoring settlements should hide the draft complaint from views,” David Beehler, an attorney for the Pittsburgh FHLB, said in court papers filed yesterday. “Public policy -– the interests of full disclosure and transparency – demands just the opposite of what JPMorgan seeks. The circumstances of this motion lead to one obvious question -– what is JPMorgan trying to hide?”
The accord, which was announced a month after the Pittsburgh hearing, settles allegations that JPMorgan, the biggest U.S. lender by assets, misled investors and the public when it sold bonds backed by faulty residential mortgages.
Lauren Horwood, spokeswoman for U.S. Attorney Benjamin Wagner in Sacramento, who worked on the complaint, said in an e-mail her office wouldn’t release the document.
Brian Marchiony, a JPMorgan spokesman, declined to comment on the FHLB’s request.
The Pittsburgh bank, which wasn’t part of the deal, is suing JPMorgan and credit ratings companies including Moody’s Investors Service over mortgage-backed securities it purchased in 2006 and 2007.
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http://www.bloomberg.com/news/2013-11-26/jpmorgan-pressured-to-disclose-13b-accord-complaint.html
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