J.P. Morgan Chase & Co. lost a bid to block buyers of $10 billion worth of residential mortgage-backed securities it packaged in 2007 to proceed as a group with their lawsuit alleging the bank misled them.
U.S. District Judge J. Paul Oetken in New York on Tuesday ruled that the claims of investors in nine separate offerings of the securities were similar enough for them to move forward as a class on the question of whether J.P. Morgan is liable for making false and misleading statements in the offering documents.
The ruling applies only to liability. Mr. Oetken said he wasn't convinced at this stage that there's a damages calculation that would cover the claims of all the investors included in the group.
J.P. Morgan last year agreed to a $13 billion settlement with the U.S. to resolve allegations the bank misled investors in mortgage-backed securities about the soundness and risks of the investments that helped bring on subprime mortgage crisis of 2008.
“Because the class is currently certified for liability purposes, this phase of litigation will focus on the issue of whether defendants made material false statements or omissions in the offering documents that affected the value of the certificates owned by the plaintiff class members,” Mr. Oetken said.
Joe Evangelisti, a spokesman for J.P. Morgan, declined to comment on the ruling.
The case is Fort Worth Employees' Retirement Fund vs. J.P. Morgan Chase & Co., 09-cv-3701, U.S. District Court, Southern District of New York (Manhattan).