JPMorgan Securities to Settle Fraud Charges J.P. Morgan Chase will pay more than $150 million to settle charges the firm misled investors about the riskiness of the mortgage backed securities that it was selling. The Securities and Exchange Commission says J.P Morgan Securities designed the packages to do poorly and then hid that fact from investors. The company neither confirms nor denies the allegations.
NPR logo

JPMorgan Securities to Settle Fraud Charges

  • Download
  • <iframe src="https://www.npr.org/player/embed/137336395/137336411" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
JPMorgan Securities to Settle Fraud Charges

JPMorgan Securities to Settle Fraud Charges

  • Download
  • <iframe src="https://www.npr.org/player/embed/137336395/137336411" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

RENEE MONTAGNE, Host:

NPR's Jim Zarroli reports.

JIM ZARROLI: The Securities and Exchange Commission said J.P. Morgan Securities sold a complex mortgage backed security to a group of institutional investors in 2007. But it allegedly failed to tell the investors that the mortgages underlying the security had been selected by a hedge fund called Magnetar, and Magnetar had shorted some of those mortgages, which means it bet they would fail, says SEC Enforcement director Robert Khuzami.

ROBERT KHUZAMI: In truth, Magnetar capital played a substantial role in the selection of those mortgage assets and stood to profit from the failure of the assets in the CDO portfolio.

ZARROLI: Jim Zarroli, NPR News, New York.

Copyright © 2011 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.