Another JP Morgan Settlement Announced Over the Weekend
JP Morgan settled another claim, this time related to mortgage securities it sold prior to the 2007-2008 financial crisis. As has frequently been the case, the announcement by JPM came over the weekend, presumably because weekend news doesn't attract the same intense spotlight you'd find during "regular business hours."
You can't blame JPM management for seeking to mute the reaction to this latest settlement. That's their job. On the other hand, we don't want to slough this off as just another minor dispute where disaffected investors seek deep pockets to make up for losses they incurred. While "Caveat emptor" ("Let the buyer beware") remains a necessary stance for any investor (and one in short supply in our dumbed-down Age of Un-enlightenment), the seller who misleads the buyer bears a degree of responsibility. Whether that degree calls for a payment of $4.5 billion to the buyer remains an open question.
On another note, while some hedge funds famously scored big hits betting against the rot that was being sold in those pre-crisis days, the real beneficiaries will turn out to be those law firms specializing in this sort of suit, such as Gibbs and Bruns, who negotiated this latest settlement. Wielding a heavy axe, they managed to convince mighty JPM to fork over $4.5 billion, from which the lawyers will slice a goodly portion to stuff in their own pockets. And, no surprise, it appears the action won't end any time soon. When sharks smell blood, you can't expect them to just swim away.
You can't blame JPM management for seeking to mute the reaction to this latest settlement. That's their job. On the other hand, we don't want to slough this off as just another minor dispute where disaffected investors seek deep pockets to make up for losses they incurred. While "Caveat emptor" ("Let the buyer beware") remains a necessary stance for any investor (and one in short supply in our dumbed-down Age of Un-enlightenment), the seller who misleads the buyer bears a degree of responsibility. Whether that degree calls for a payment of $4.5 billion to the buyer remains an open question.
On another note, while some hedge funds famously scored big hits betting against the rot that was being sold in those pre-crisis days, the real beneficiaries will turn out to be those law firms specializing in this sort of suit, such as Gibbs and Bruns, who negotiated this latest settlement. Wielding a heavy axe, they managed to convince mighty JPM to fork over $4.5 billion, from which the lawyers will slice a goodly portion to stuff in their own pockets. And, no surprise, it appears the action won't end any time soon. When sharks smell blood, you can't expect them to just swim away.
The group, represented by Houston law firm Gibbs & Bruns LLP, were prepared to argue that the mortgage securities didn't meet sellers' promises or were improperly managed.More...
The deal could embolden other insurance companies and investment partnerships to seek similar settlements with other major U.S. banks.
But the pact still leaves one major issue unresolved. It doesn't end claims investors had on securities issued by Washington Mutual....
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