The National Credit Union Administration has filed a lawsuit against JPMorgan Chase (NYSE:JPM) unit J.P. Morgan Securities and Bear, Stearns over the sale of mortgage-backed securities, the NCUA said in a statement. The lawsuit has been filed in federal district court in Kansas and alleges that the companies violated federal and state securities laws in their efforts to sell $3.6 billion in such assets.
According to the NCUA, the accused firms "made misrepresentations in connection with the underwriting and subsequent sale" of MBSes to four credit unions. The NCUA claims the credit unions subsequently became insolvent because of those transactions.
The administration's legal action against the bank is its largest of all time.
Bear, Stearns collapsed in 2008; JPMorgan Chase purchased its remains later that year. It ceased using the Bear, Stearns name in early 2010.