Whoever is writing the cheques for US company JPMorgan Chase better limber up his hand. A US district court judge has granted preliminary approval for the bank, with branches in Australia, to shell out $280 million to settle claims it misled investors in the purchase of billions of dollars in mortgage-backed securities.
The settlement, which is still subject to final court approval, will be the third-largest in a class action against banks that sold the shoddy securities whose failure helped kick-start the 2008 financial meltdown.
The lawsuit was led by the Public Employees’ Retirement System of Mississippi, according to a Reuters report. The organization filed suit against JPMorgan in 2008 over what it said were false statements and omissions in connection with the sale of $36.8 billion in mortgage bonds issued in 2006 and 2007. The suit accused the lender of ignoring its own standards and guidelines when evaluating the loans backing the securities.
The JPMorgan settlement is only the latest in a string of class-action lawsuits against big banks, Reuters reported. In March, Royal Bank of Scotland agreed to pay $275 million to settle similar claims. In December, Bank of America inked a $500 million deal with investors who claimed they were misled by the bank’s embattled Countrywide unit.