JPMorgan Settles Case With S.E.C.

(I've got to think that JPMorgan just views as a cost of doing business - MONKEY business, no less! - gd)

WASHINGTON — JPMorgan Chase has agreed to pay $153.6 million to settle federal civil accusations that it misled investors in a complex mortgage securities transaction in 2007, just as the housing market was beginning to plummet, the Securities and Exchange Commission announced Tuesday.

JPMorgan’s investment bank had structured and marketed a security known as a synthetic collateralized debt obligation without informing buyers that a hedge fund that helped select the assets in the portfolio stood to gain, in most cases, if the investment lost value.

The S.E.C. also separately accused Edward S. Steffelin, an executive at the investment advisory firm responsible for putting together the mortgage security that was sold by JPMorgan. Both JPMorgan and Mr. Steffelin were accused of negligence but not intentional or reckless misconduct.

The agency accused Mr. Steffelin of misleading investors into believing that a unit of the firm he worked for, the GSC Capital Corporation, had selected the mortgage securities in the investment portfolio. Instead, the S.E.C. said, a hedge fund named Magnetar Capital chose the assets. A lawyer for Mr. Steffelin said he intended to fight the charges.

http://www.nytimes.com/2011/06/22/business/22sec.html?_r=1&nl=todaysheadlines&emc=tha25