Federal and state officials pledged on Tuesday to bring more cases against misconduct that fueled the financial crisis, after New York sued JPMorgan Chase & Co late Monday over mortgage-backed securities packaged and sold by Bear Stearns.
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The case was filed by New York Attorney General Eric Schneiderman, and was the first action to come from a federal-state working group created earlier this year to bring such cases, roughly four years after the peak of the crisis.
The civil lawsuit accused Bear Stearns, bought by JPMorgan for $10 a share in March 2008, of deceiving investors by leading them to believe that the quality of loans in the mortgage-backed securities had been carefully evaluated, even though they had not been.
Bear systematically ignored defects in the loans and kept investors in the dark, the suit said. The allegations are similar to those investors have charged in private lawsuits against a much wider array of Wall Street firms.
"This has been a great collaboration, it continues to be a great collaboration, there are more cases to come,'' Schneiderman said during a press conference on Tuesday at the U.S. Justice Department's headquarters in Washington, D.C.
JPMorgan's purchase of Bear Stearns was done with the strong encouragement and heavy involvement of the federal government, but officials said that does not absolve JPMorgan of Bear Stearns' alleged misconduct.
"The liability traveled with the company, so it would be far worse for us to send the message that this kind of fraud is to be tolerated,'' Schneiderman said. ``No one is above the law.''