JPMorgan Wins Dismissal of $200 Million Mortgage-Securities Suit

Feb 06, 2014 12:01 am ET

Feb. 6 (Bloomberg) -- JPMorgan Chase & Co.’s Bear Stearns unit won dismissal of a suit brought by hedge fund SRM Global claiming it had lost more than $200 million tied to its reliance on misleading representations about the value of mortgage-backed and asset-backed securities.

U.S. District Court Judge Robert Sweet in Manhattan yesterday dismissed SRM Global’s claims of securities fraud and violation of the Exchange Act saying the fund took too long to file the lawsuit. Sweet also ruled that SRM failed to adequately prove a claim that it relied upon the alleged misrepresentations in Bear Stearns’ 2006 filings with the U.S. Securities and Exchange Commission.

“SRM does not link its review of any particular statements in that document or any other document to any actual purchases of Bear Stearns securities and does not identify a particular transaction,” Sweet said in his ruling, “SRM has not pled a timely, viable primary violation.”

The JPMorgan unit reached a settlement of a consolidated suit brought by investors who lost money from 2006 to 2008 in Nov. 2012.

Bear Stearns agreed to the $275 million cash settlement, which called for the money, minus legal fees, to go to shareholders who claimed the company issued “materially false and misleading statements” about financial results. Its auditor, Deloitte & Touche LLP, agreed to pay $19.9 million.

SRM Global opted out of that settlement, Sweet said. SRM was founded by former UBS AG trader Jon Wood. Wood didn’t immediately respond to an e-mail sent to him after business hours seeking comment about the ruling.

Brian Marchiony, a spokesman for JPMorgan, declined to comment on Sweet’s decision.

The case is In re The Bear Stearns Cos. Securities, Derivative and ERISA Litigation, 08-mdl-1963 and 08-cv-2793, U.S. District Court, Southern District of New York (Manhattan).

--Editors: Joe Schneider, Mary Romano