CHARLOTTE, N.C./WILMINGTON, Delaware (Reuters) - JPMorgan Chase & Co is advanced with U.S. regulators talks of sub-prime mortgage debt in 2007, to address a probe in her role as sell a case that highlights a rare misstep by the Chief Executive Jamie Dimon.
JPMorgan disclosed in a regulatory filing Friday that he was in talks with the U.S. Securities and Exchange Commission to resolve the probe, said a source familiar with the situation on the reports of the Bank with the hedge fund Magnetar on the creation of the back-to-back obligations (CDOS).
The second US Bank by assets and the Chief Executive, have avoided much of the controversy of the mortgage which affected competitors such as Goldman Sachs Group Inc., Bank of America Corp. and Wells Fargo & Co in the financial crisis.
Mortgage backed up the Securities and CDOS were at the heart of the crisis. Wall Street banks sucked real estate loans, often subprime mortgages and repackaged in bonds and other securities which have been sold with range high credit ratings.
When the United States real-estate market crashed, the titles plummeted in value, generating enormous losses for investors around the world.
Analysts said that a settlement with the SEC is likely to cause damage in the long term reputation for JPMorgan or Dimon, who said that all banks must not be submitted in the same basket when talking of the financial crisis.
"Every major player will go through this, to some extent," said Matt McCormick, a portfolio with Bahl & Gaynor investment counsel Manager. "But I do not think that the market is concerned that at this stage." It seems more smoke fire right now. ?
Shares of closed JPMorgan from 0.3% to $45.04 Friday.
JPMorgan disclosure comes a day after court documents revealed that the SEC had assigned Credit Switzerland for documents related to the operations of securitization of home loans.
The SEC also sued JPMorgan this week for documents related to mortgage securitizations, according to Bloomberg.
The most recent assignments may indicate expansion increased the SEC probe on the U.S. lenders mortgage transactions.
"The SEC is taking a more active role on what is happening in private litigation, said Thomas Gorman, associated with the firm of Dorsey & Whitney LLP.".
Gorman said securities regulators assignments is not perhaps part of a new investigation but an expansion of a current probe.
MAGNETAR DEAL
JPMorgan said previously that he had received "a number of subpoenas and informal requests," the federal authorities and States on CDO and mortgage-backed securities.
Recent reports of the Government and the prosecution accused traders and managers of the Bank of suspicious knowingly ready packaging in bonds and other securities, sometimes betting against the obligations that their miraculous customers.
The SEC investigation centered on JPMorgan adequately communicated to investors that Magnetar helped select the Covenant CDO assets while bet against parts thereof, the Financial Times reported in April.
JPMorgan fired back in the market of CDOS in 2005, but is back in business and extended in 2006, according to the site Web ProPublica. JPMorgan and Magnetar agreed to an agreement in early 2007 to create and sell a commando of $ 1.1 billion, according to ProPublica.
In its disclosure filing Friday, JPMorgan considered its possible maximum loss of judicial proceedings, more reserves established, at $ 4.5 billion at 31 March, unchanged from its estimate to December 31.
Wells Fargo mortgage more important of the country, said that its worst litigation costs increased due to issues related to the foreclosure. He said its possible maximum loss of judicial proceedings pink $ 500 million to $ 1.7 billion in the first quarter because of its exposure to the legal issues related to the foreclosure.
(Written by Tom Hals and Joe Rauch in Charlotte, North Carolina.) (Editing by Tim Dobbyn, John Wallace and Matthew Lewis)
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