JPMorgan, Credit Suisse settle SEC cases for $417 million

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November 17, 2012 6:14 AM EST

JPMorgan Chase & Co and Credit Suisse Group will pay a combined $416.9 million (262.4 million pounds) to settle U.S. civil charges that they fraudulently misled investors in residential mortgage-backed securities offerings.

The U.S. Securities and Exchange Commission said on Friday JPMorgan will pay $296.9 million, while Credit Suisse will pay $120 million. Both agreed to settle without admitting or denying the charges.

JPMorgan and Credit Suisse in separate statements said they were pleased to settle.

Friday's settlements are less than the $550 million that Goldman Sachs Group Inc had agreed to pay in 2010 to settle SEC charges that it misled investors in a complex mortgage bond transaction. That bank also did not admit wrongdoing.

The SEC accused JPMorgan of making materially false and misleading statements about the quality of home loans that backed a $1.8 billion residential mortgage-backed securities (RMBS) offering it underwrote in December 2006.

It also held JPMorgan responsible for the failure of Bear Stearns Cos, which the bank bought in 2008, to disclose its practice of keeping cash settlements from loan originators on problem loans that Bear sold into mortgage loan trusts.

Credit Suisse failed to disclose similar cash settlements, and also made misstatements in regulatory filings about when it would buy back mortgage loans when borrowers missed their first payments, known as first payment defaults.

"In many ways, mortgage products such as RMBS were ground zero in the financial crisis," SEC enforcement chief Robert Khuzami said in a statement. "Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed."

(Reporting By Aruna Viswanatha and Sarah N. Lynch in Washington, D.C. and Jonathan Stempel in New York; Editing by Gerald E. McCormick and Richard Chang)

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