REUTERS - The U.S. credit union regulator sued JPMorgan Securities and Bear Stearns & Co on Monday over alleged misconduct in the sale of $3.6 billion in mortgage securities to credit unions that collapsed because of losses from the securities.
The lawsuit by the National Credit Union Administration is its second against JPMorgan involving losses to credit unions. In June 2011 the agency sued it over securities in which JPMorgan was the underwriter and seller. That suit is still pending.
Bear Stearns, which JPMorgan (JPM.N) acquired in 2008, made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central, Western Corporate, Southwest Corporate and Members United Corporate federal credit unions, the agency said.
The lawsuit, filed in federal court in Kansas, is the largest such lawsuit the regulator has filed to date.
A JPMorgan spokeswoman declined to comment.
In the past two years the agency has brought similar actions against Barclays Capital, Credit Suisse, Goldman Sachs, RBS Securities, UBS Securities, Wachovia and others.
Most of the cases are pending, but it has settled claims against Citigroup, Deutsche Bank Securities and HSBC for around $170 million.
The agency has been trying to recover losses related to the failure of five institutions that it seized in 2009 and 2010 after they ran into trouble due to the crumbling housing market.
(Reporting by Aruna Viswanatha; Editing by Phil Berlowitz)
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