ABP settles with JPMorgan over resi MBS

Dutch pension fund for civil servants says it is ‘very content’ to have settled its lawsuit of a year ago over the alleged misselling of residential mortgage-backed securities in 2006 and 2007.

Stichting Pensioenfonds ABP, one of the largest pension funds in the world and a significant investor in real estate, has halted a lawsuit against JPMorgan over alleged misselling of residential mortgage- backed securities.

The mammoth €274 billion Dutch fund for civil servants revealed today it had reached a settlement with JPMorgan over its claim that was first filed in the Supreme Court of the State of New York in December of last year.

In a statement, it said: “ABP is very content to have reached this settlement and is pleased that JPMorgan was willing to reach a mutually satisfactory conclusion of this litigation.”

Its allegation is that the bank was guilty of negligent misrepresentation in selling securities before the onslaught of the global financial crisis – though JPMorgan continues to refute the allegation. The Dutch investor specifically argued that it was given “false and misleading information” over the investments it bought in 2006 and 2007, which were allegedly “far riskier” than it had been led to believe, and which subsequently lost value after plummeting into delinquency. The securities were collateralized against mortgages that originated by or acquired by JPMorgan Bank, as well as Bear Stearns' mortgage arm, EMC, and, among others, Washington Mutual Bank.

The mortgage loans backing the securities were worth much less than had been represented, alleged ABP in its lawsuit, and were taken out by borrowers “who were much less creditworthy than had been represented.”

ABP has not revealed the volume of residential mortgage backed securities its claim relates to.

Not only has ABP sued JPMorgan but it has also lodged law suits against four other banks as well, being Deutsche Bank, Credit Suisse, Morgan Stanley and Goldman Sachs.