The lawsuit, filed on behalf of investors who bought mortgage bonds issued by JPMorgan in 2007, claims the bank misled its investors about the safety of the securities, according to a Reuters report. The lawsuit claims JPMorgan misled investors about the underwriting, appraisals and credit quality of the certificates, which were worth 62 cents on the dollar – at most – following the financial crash.
JPMorgan argued that the case shouldn’t be certified as a class action because some investors were more sophisticated than others and mortgage-backed securities had evolved rapidly during the two-year period between the issuance of the bonds and their collapse, according to Reuters.
But U.S. District Judge Paul Oetken rejected those arguments, naming the Laborers Pension Trust for Northern California and the Construction Laborers Pension Trust for Southern California as lead plaintiffs.
JPMorgan has faced – and is facing – numerous lawsuits over its sale of mortgage-backed securities during the run-up to the financial crisis. Last year, the company agreed to pay a then-record-setting $13 billion to resolve government probes of its sale of mortgage bonds.
JPMorgan must face a class-action lawsuit over $10 billion in mortgage-backed securities it sold before the financial crisis.