JPMorgan Chase & Co (NYSE:JPM) has won preliminary approval from a U.S. judge for its agreement to pay $280 million to resolve claims that it misled investors in billions of dollars worth of mortgage-backed securities.
U.S. District Judge Pamela Chen, in Brooklyn, New York, issued the preliminary approval on Friday. The settlement, which is subject to final court approval, would resolve a class action lawsuit filed in 2008.
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The accord marks the third-largest settlement in a U.S. class action against banks that packaged and sold mortgage securities at the center of the 2008 financial crisis.
The class action was led by the Public Employees' Retirement System of Mississippi, which had sued over what it said were untrue statements and omissions in connection with $36.8 billion in mortgage securities issued in 2006 and 2007.
The lawsuit accused JPMorgan of ignoring its standards and guidelines when evaluating and buying loans included in 33 offerings of mortgage securities.
After a series of rulings, MissPERS ultimately moved forward on a narrower case that would cover investor claims stemming from 26 offerings of mortgage-backed securities. The settlement resolves claims held by investors in those offerings.
A hearing on final settlement approval is scheduled for July 24.
David Stickney, a lawyer for the plaintiffs at Bernstein Litowitz Berger & Grossmann, declined comment. A spokeswoman for JPMorgan did not respond to a request for comment.
The JPMorgan settlement, which was filed with the court in March, follows a deal announced in February in which Royal Bank of Scotland Group Plc agreed to pay $275 million to resolve similar mortgage-backed securities claims.
Other class-action settlements over mortgage-backed securities include a $500 million deal between Bank of America Corp (NYSE:BAC) and investors claiming they were misled by the bank's Countrywide unit. A federal judge approved that settlement in December.
A separate $315 million accord over securities issued by Bank of America's Merrill Lynch unit won court approval in 2012.
The case is Plumbers' & Pipefitters' Local #562 Supplemental Plan & Trust v. J.P. Morgan Acceptance Corporation I, et al, U.S. District Court, Eastern District of New York, No. 08-01713.