JPMorgan Chase & Co. is negotiating a settlement in a class action tied to shoddy mortgage-backed securities issued by The Bear Stearns Companies Inc. before it bailed out the firm.
The lawsuit was originally filed in September 2008 in U.S. District Court for the Southern District of New York on behalf of investors on $17.58 billion in MBS.
The securities were issued by Bear Stearns, which the New York-based company acquired in May 2008 as the financial system was on the brink of a meltdown.
A letter Thursday
filed with the court by the plaintiffs’ counsel indicated that mediation and “extensive negotiations” has resulted in a potential settlement.
An agreement in principle has been reached, and a binding term sheet outlining the material terms of the settlement has been executed.
The
letter requests a Feb. 2 deadline for the parties to submit their detailed stipulation of the settlement.
The settlement requires that certain conditions be satisfied, including the plaintiffs’ completion of ongoing due diligence by Jan. 31.
“The settlement, if approved by the court, will completely resolve the litigation,” the letter states.
Published reports indicate that the settlement amount is $500 million.
