On Monday, Virginia Attorney General Mark Herring dropped JPMorgan Chase from a mortgage-bond lawsuit the state has filed against the country’s largest banks. Herring decided to drop JPMorgan after learning that Ken Cuccinelli, his predecessor as attorney general, had already brokered a confidential settlement with the lender, according to a Washington Post report.
JPMorgan and its subsidiary, Washington Mutual, were originally named in Virginia’s $1.15 billion suit against 13 lending institutions. The banks were sued for allegedly stacking securities sold to the Virginia Retirement System with shoddy loans.
The VRS purchased 220 residential mortgage-backed securities from the banks starting in 2004. When the financial markets collapsed during the meltdown, the fund was forced to sell most of those securities and lost $383 million, the Post reported.
Herring’s office alleges that the banks misled the state about the quality of the loans underlying the securities. Attorney general spokesman Michael Kelly said that although JPMorgan and its subsidiary will be dropped from the suit, legal action against the remaining 11 banks will continue. The lawsuit is the largest financial fraud action ever brought by the state, the Post reported.
Here’s a unique bit of news: There’s someone out there who’s not suing JPMorgan.