The New York Attorney General sued JPMorgan Chase on Monday, alleging that Bear Stearns, the troubled investment bank it bought in 2008, "kept investors in the dark" about the quality of the mortgage-backed bonds it was selling as the market started to sour.
The lawsuit is the first legal action against a Wall Street bank to come from a joint federal and state task force announced by President Barack Obama during his State of the Union address in January. It allegescivil fraud violations, which means that potential penalties will be measured in dollars, not jail terms. Nevertheless, the JPMorgan Chase lawsuit qualifies as one of the more significant actions taken by a law enforcement agency to date against a Wall Street bank.
JPMorgan Chase acquired Bear Stearnsin March 2008 in a deal brokered and supported by the federal government.