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JPMorgan Chase, Credit Suisse and Morgan Stanley to pay $100m Ponzi fine over the lawsuit filed by George Miller of American Financial Services Inc.
By Amarendra Bhushan for CEOWORLD Magazine Updated:October 11, 2009
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JPMorgan Chase & Co. (NYSE:JPM), Bear Stearns, Morgan Stanley (NYSE:MS) and Credit Suisse Group AG (NYSE:CS) agreed to pay $100 million to settle a lawsuit over their roles in the bankruptcy of a Philadelphia mortgage lender.
The agreement between ABFS’s bankruptcy trustee, George Miller, and financial service firms J.P. Morgan, Bear Stearns (now part of J.P. Morgan), Credit Suisse and Morgan Stanley in Philadelphia’s Common Pleas Court is the latest in a series of agreements.
A $33 million settlement with ABFS directors and officers, including co-founder Beverly Santilli, was approved last October. And two months ago, Blank Rome, the Philadelphia-based law firm that represented ABFS, agreed to pay $20 million to settle a malpractice case brought by Miller.
The trustee had charged that the banks improperly helped prop up the lender when its business of lending to subprime borrowers was actually dead. Some 22,000 debt investors were left in the lurch when the lender collapsed into bankruptcy in 2005.
Under the terms of the settlement, which is subject to court approval, JPMorgan will pay $55 million to settle claims against itself and Bear Stearns, Credit Suisse will pay $37.5 million, and Morgan Stanley will pay $7.5 million, the attorney, Steven Coren of Philadelphia law firm Kaufman Coren & Ress, said.
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