JPMorgan Chase & Co., the biggest U.S. bank, was sued by New York Attorney General Eric Schneiderman, who alleged that the Bear Stearns business the bank took over in 2008 defrauded mortgage-bond investors, Bloomberg News reported today. Investors were deceived about the defective loans backing securities they bought, leading to "monumental losses," Schneiderman said in a complaint filed yesterday in New York State Supreme Court. "Defendants systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans," Schneiderman’s office said. Schneiderman in January was named co-chairman of a state-federal group formed to investigate misconduct in bundling of mortgage loans into securities leading up to the financial crisis. The group includes officials from the U.S. Justice Department, the Securities and Exchange Commission, the FBI and other federal and state officials.
