JPMorgan Reaches $4.5 Bln Settlement With Institutional Investors

(RTTNews) - JPMorgan Chase & Co. (JPM) said Friday that it has reached a $4.5 billion agreement with 21 major institutional investors, represented by Gibbs & Bruns LLP, to make a binding offer to the trustees of 330 residential mortgage-backed securities trusts issued by J.P. Morgan and Bear Stearns.

The institutional investors have committed to support the settlement and have requested that the trustees accept the settlement offer.

The offer, which the trustees may seek court approval for, would resolve all representation and warranty claims as well as servicing claims on all trusts issued by J.P. Morgan and Bear Stearns.

The agreement, however, does not resolve claims on trusts issued by Washington Mutual.

JPMorgan acquired Bear Stearns and Washington Mutual during the financial crisis.

The offer will remain open until January 15, 2014, but may be extended pursuant to its terms for an additional sixty days.

In October, JPMorgan Chase agreed to pay $5.1 billion to settle claims over the sale of faulty mortgage-backed securities to Fannie Mae and Freddie Mac ahead of the housing bubble. The settlement resolves is part of a larger agreement with the U.S. Justice Department. JPMorgan and the Justice Department are said to have discussed settlements totaling $13 billion.

JPMorgan has incurred a whopping $18 billion in legal expenses since 2008.

The company agreed in October to pay $100 million to settle charges leveled by the Commodity Futures Trading Commission related its handling of the so-called 'London Whale' trading loss.

In September, JPMorgan agreed to pay about $920 million in penalties to US and UK regulators for the derivative losses suffered in the 'London Whale' trading.

Last month, JPMorgan reported a loss for its third quarter, reflecting mainly higher legal expenses, including reserves for litigation and regulatory proceedings. Results for the recent quarter included legal expense in Corporate of $9.2 billion.