JPMorgan wins dismissal of most Dexia mortgage claims
By Jonathan Stempel and Nate Raymond
(Reuters) - JPMorgan Chase & Co (JPM.N: Quote) has won the dismissal of nearly all of a lawsuit accusing it of misleading the Belgian-French bank Dexia SA (DEXI.BR: Quote) into buying more than $1.6 billion of troubled mortgage debt.
The decision made public on Wednesday by U.S. District Judge Jed Rakoff in Manhattan is a victory for the largest U.S. bank and its chief executive, Jamie Dimon, eliminating an estimated 99 percent of the potential damages.
Dexia's case that gained notoriety after emails and other materials were disclosed that suggested the bank and its affiliates knew the residential mortgage-backed securities they were selling were toxic, but sold them anyway.
Rakoff said he would explain the reasons for his decision "in due course."
In a statement, JPMorgan's law firm Cravath, Swaine & Moore said the dismissal of Dexia's claims on all but five of the 65 RMBS certificates at issue reduced potential damages to about $5.7 million from $774 million.
Dexia was not immediately available for comment. A spokesman for its U.S. law firm declined to comment immediately. JPMorgan spokeswoman Jennifer Zuccarelli declined to comment.
NOT OUT OF THE WOODS
The lawsuit is one of many accusing banks of trying to boost profit and revenue by packaging low-quality mortgages into seemingly safe securities, and simultaneously hiding the risks or failing to ensure that the loans were underwritten properly. Continued...