Feds Pursue Criminal Charges Against Bank Execs for Mortgage Securities Fraud

Federal prosecutors are pursuing criminal charges against executives from J.P. Morgan Chase & Co. and Royal Bank of Scotland Group PLC (RBS) for allegedly selling faulty mortgage securities, according to the Wall Street Journal.

The WSJ cited unnamed sources in saying that federal prosecutors were trying to determine if bank executives ignored warnings that too many flawed mortgages were being packaged into investment offerings and whether or not they can prove these actions constituted fraud.

According to the story, prosecutors are examining individuals tied to a $2.2 billion RBS deal in 2007 that repackaged mortgages into bonds. The SEC announced a settlement with RBS in 2013 that said the lead banker in the deal — which the SEC did not name — worked to push it through, overriding the concerns of RBS’ diligence department.

RBS did not admit or deny the SEC finding in the 2013 settlement. In a July 2015 securities filing, the bank said that its mortgage securitizations were being investigated by both the civil and criminal divisions of the Justice Department.

At J.P. Morgan, prosecutors are looking into two unnamed individuals who worked on another mortgage securities deal. The bank noted the criminal probe into those dealings in its Nov. 2 quarterly securities filing.

The WSJ article notes that many previous bank settlements tied to the housing crisis invoked a law that gives prosecutors 10 years in which to pursue any charges tied to financial misconduct. It said that the Justice Department is attempting to complete their investigation and file charges against individuals prior to January 2017, when the statute of limitations would run out for many of the alleged violations.

The Cogdell Law Firm is a full service criminal litigation and appellate law firm. We provide client-focused representation at all stages of the process, whether our clients are seeking to avoid charges, have been charged, or are seeking reversal of a conviction on appeal. When results matter most, contact Dan Cogdell at (713) 426-2244 or dan@cogdell-law.com.