JPMorgan Chase has agreed to pay $153.6m to resolve US civil fraud charges that it misled investors in a mortgage-related security created for Magnetar, an Illinois hedge fund that was betting against the deal
JPMorgan Chase has agreed to pay $153.6m to resolve US civil fraud charges that it misled investors in a mortgage-related security created for Magnetar, an Illinois hedge fund that was betting against the deal.
The Securities and Exchange Commission alleged that JPMorgan was negligent in failing to tell investors that Magnetar helped select mortgages included in the collateralised debt obligation, known as Squared, and placed a substantial bet to profit from its decline.
According to the SEC, JPMorgan’s marketing material told investors, including a Minnesota faith-organisation and an adviser to General Motors’ pension plan, that the CDO’s portfolio had been selected by GSC Capital, an independent investment adviser.
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JPMorgan settled without admitting or denying wrongdoing, and also agreed to reimburse investors in a different CDO, known as Tahoma.
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