JP Morgan in WaMu probe
HOLDERS of $1bn (£659m) of securities issued by a Washington Mutual entity have sued to void an eve-of-bankruptcy exchange of their investment, a complaint filled with claims of fraud and secret agreements says.
The dispute centres around an exchange of securities that were swapped into preferred stock just as regulators seized Washington Mutual Bank (WaMu) in September 2008, in the biggest bank failure in US history.
The trust securities were transferred to WaMu, which was then sold to JPMorgan Chase. The lawsuit seeks to undo that exchange of securities. The suit also seeks a determination by the judge that JPMorgan knew of the misrepresentations by WaMu about the soundness of its bank and that it cannot be a bona fide purchaser of the securities.