As of 12 January 2011, Benjamin Lawsky, superintendent of New York state’s Department of Financial Services, is evidently investigating whether a number of large banks including JP Morgan, Citigroup, Wells Fargo and Bank of America overcharged customers on force-place insurance, in which the loan servicer purchases an insurance policy in case a homeowner does not keep up his or her insurance premiums - and tacks on the cost of the insurance to the borrower's mortgage debt.
Nonprofit organisation Albert Ellis Institute alleges that Manhattan Chamber of Commerce’s chairman illegally transferred more than $2.5 million to his own accounts and that JPMorgan Chase & Co. let it happen.
Alleged bribery in connection with efforts to obtain business underwriting county bonds and interest swap agreements in Alabama has led to over 20 criminal convictions of individuals including county commissioners. The SEC also brought enforcement actions, including against JPMorgan and individual bankers.
JPMorgan agreed to pay a $25 million fine and make a $50 million payment to Jefferson County to settle civil claims brought by the SEC. JPM also forfeited over $647 million in claimed swap termination fees.
The SEC accused JPMorgan of paying more than $8.2 million to local Alabama firms and broker-dealers with ties to Jefferson County public officials, looking to win $5 billion in county bond underwriting and interest rate swap agreements.
At least two cases brought by the bankruptcy trustees of individuals accused of running massive Ponzi schemes have alleged that JP Morgan knew of or was complicit in the fraudulent schemes.
These cases generally allege that banks including JPMorgan, and other entities such as rating agencies, made misrepresentations related to mortgage-backed securities, for example overstating the quality of underlying loans, the underwriting standards, etc., causing investors to purchase securities that were much riskier than they were led to believe.
As of January 27 2011, the Judicial Panel on Multidistrict Litigation was to hear motions to transfer and consolidate “numerous” cases alleging that JP Morgan used its position as custodian of a large percentage of the global silver supply and colluded to manipulate the price of silver-backed securities so as to profit from its own large short position in silver.
Related actions alleging that Bear Stearns (now J.P. Morgan Securities Inc.) induced investors to buy, and insurer Ambac to guarantee, securities backed by a pool of mortgage loans that a Bear deal manager allegedly called "a SACK OF SHIT."
Cases brought by JPMorgan investment bank clients, generally alleging that JPM wrongfully invested the clients' accounts in risky mortgage-backed securities, even during the collapse of the mortgage sector and despite the fact that JPM was divesting itself and certain other of its clients from these investments.
Consolidated multi-district litigation proceeding in Illinois federal court (Chicago);claims in general are that Chase improperly suspended or reduced plaintiff's home equity line of credit accounts. In re JPMorgan Chase Bank Home Equity Line of Credit Litigation; MDL No. 2167; Master docket 10-CV-3647; lead case: Hackett v. JPMorgan Chase, CA No. 1:09-7986 (N.D.Ill) At least 9 class actions consolidated in this proceeding including: Cavanagh v. JPMorgan Chase, CA No. 0:09-3389 (D. Minn.); Mayes v. JPMorgan Chase CA No. 4:10-157 (N.D.Tex.); Walsh v. JPM, CA No. 2:09-4387 (C.D.Cal.); Wilder v. JPM CA No. 8:09-834 (C.D.Cal.); Frank v. Washington Mutual Bank, CA No. 2:09-3408 (E.D. Cal.); Yakas v. Chase Bank, CA No. 3:09-2964 (N.D.Cal.); Malcolm v. JPM Chase, CA No. 5:09-4496 (N.D.Cal.); Kimball v. Washington Mutual, CA No. 3:09-1261 (S.D.Cal.). Additional actions may be in process of transfer/consolidation, e.g.: Chrystal et al. v. JPMorgan Chase Bank, No. 10-CV-6023 (E.D.N.Y.) filed 29 December 2010. (alleges that JPM improperly reduced assessed value of home by $250,000); Schulken v. Wash. Mut. Bank, Case No.: 09-CV-02708-LHK (N.D. Cal.) ( 2010)
Consolidated multi-district litigation, In re: JP Morgan Auction Rate Securities (ARS) Marketing Litigation, 10-MDL-2157 (S.D.N.Y.) - the actions allege that investment banks running auctions in these securities, including JPMorgan, improperly manipulated the auction process, making the securities appear more valuable than they were, in order to gain underwriting and auction dealer fees. When the auctions collapsed, plaintiffs allege they were left holding billions of dollars in illiquid securities. Consolidated actions include: O'Gara v. JP Morgan Chase & Co. et al., 1:09-cv-06199-PGG (lead plaintiff/case) Bankruptcy Management Solutions, Inc. et al v. JPMorgan Chase Bank, N.A. et al., 1:10-cv-00926-PGG Cellular South, Inc. v. J.P. Morgan Securities, Inc. et al., 1:10-cv-04552-PGG Fulton Financial Advisors, National Association v. J.P. Morgan Securities, Inc., 1:10-cv-04555-PGG The actions generally assert that JPM's Securities division misrepresented the risk and liquidity of auction rate securities, and failed to disclose that it (along with other brokerage firms) were supporting the auctions, creating an appearance of stable market and higher prices. As a result of the subprime/lending crisis, brokers withdrew investment in these securities, leaving investors unable to sell or cash out.
These are actions brought by pension funds that participated in 'securities lending' investment programs. In general, the pension funds entered into agreements with JPM whereby the funds allowed JPM to lend securities owned by the funds to third parties. JPM was then to invest the collateral in investments specified by the agreements with the funds, in order to generate money for the funds. In these cases, the funds allege mismanagement - either because JPM loaned the securities to parties who were in increasingly bad circumstances, or because the collateral was invested in risky securities; plaintiffs also allege self-dealing in that JPM put the pension funds at risk while profiting on related investments or themselves avoiding the risk created for the funds.
Hundreds if not thousands of individual and class action cases have been filed in U.S. state and federal courts. These cases generally allege that lending banks including Chase Bank improperly initiated and continued foreclosure proceedings by, for example; foreclosing on homes not purchased with a mortgage or where no payments were late or due; initiating foreclosure proceedings despite failing to produce or prove ownership of underlying loan documents; relying on fraudulent (e.g. “robo-signed”) affidavits submitted by individuals without actual knowledge of the underlying loans or circumstances; and other allegedly wrongful or fraudulent actions.
All 50 U.S. State Attorney Generals have announced investigations into foreclosure irregularities.
Ongoing criminal proceeding in Italy related to sale of bonds to the city of Milan.
These actions generally claim that, despite receiving billions of dollars in bail-out funds from the federal government after the mortgage market collapse, JPM nevertheless reneged on its agreement to grant mortgage loan modifications to eligible borrowers and instead established a 'system' or 'program' designed to refuse such modifications.
Actions under minimum wage and fair labor standards act laws by loan officers claiming that JPMorgan did not pay salary and overtime pay.
JPMorgan is reported to be in talks with the Securities & Exchange Commission to settle an investigation into marketing of certain mortgage-backed derivatives (“Squared” Magnetar fund CDO marketing investigation): The investigation includes issues of whether JPMorgan properly advised investors when marketing mortgage-backed derivatives (collateral debt obligations or CDOs); in particular, whether JPM disclosed that Magnetar, a hedge fund which was involved in selecting assets backing the derivatives, was also 'betting against' parts of the deal.