JPMorgan Deal Brings $300M To Calif. Pension Funds
SACRAMENTO, Calif. (AP) — JPMorgan Chase & Co. will pay nearly $300 million to California's public employee and teacher pension funds as part of a settlement related to mortgage-related investments, state Attorney General Kamala Harris announced Tuesday.
The $299 million in damages will settle claims that the company misrepresented the value of residential mortgage-backed securities sold to the California Public Employees Retirement System and California State Teachers' Retirement System between 2004 and 2008.
"JP Morgan Chase profited by giving California's pension funds incomplete information about mortgage investments," Harris said in a statement. "This settlement returns the money to California's pension funds that JP Morgan wrongfully took from them."
The settlement is part of a broader, $13 billion settlement between the investment company and the U.S. Department of Justice. Under the larger settlement, JPMorgan will provide $4 billion in mortgage relief to the states, including California.
Harris said her office's investigation found that documents provided by the company did not accurately disclose the nature of the underlying mortgages and that the company did not properly eliminate risky loans from the securities it was offering the pension funds.
The settlement will reimburse the funds for the losses they took for investing in mortgage-backed securities offered by JPMorgan, Washington Mutual Bank and Bear Stearns. JPMorgan acquired the other two companies in 2008 and has said most of its mortgage-backed securities came from them.
The federal settlement includes $4 billion in mortgage relief for consumers nationwide who were harmed by the same three firms. The money will go toward loan modifications, forgiving the principal on mortgages and efforts to improve blighted neighborhoods.
Harris' office could not predict how much of the $4 billion will come to California but said the distribution will be overseen by an independent monitor to make sure the company meets its obligations under the settlement. It was not clear how the $300 million is being carved from in the $13 billion settlement.
California also is receiving about $20 billion from a separate national mortgage settlement in 2012. That deal was with the nation's largest banks, including JPMorgan.
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