Defendant Name:
J.P. Morgan Securities LLC
Defendant Type:
Subsidiary of Public Company
Public Company Parent:
JPMorgan Chase & Co.
SIC Code:
6712
CUSIP:
46625H10
Document Reference:
complaint_11-cv-04206
Document Details
Legal Case Name
SEC v. J.P. Morgan Securities LLC (f/k/a J.P. Morgan Securities Inc.)
Document Name
Complaint
Document Date
21-Jun-2011
Document Format
Civil Proceeding
Case Number
11-cv-04206
Federal District Court
New York, Southern District of New York
Federal District Judge
Richard M. Berman
Allegation Type
Securities Offering
Document Summary
The Complaint stated that: "The Commission brings this securities fraud action relating to the structuring and marketing of a largely synthetic collateralized debt obligation ('CDO') called Squared CDO 2007-1 ('Squared'). The investment portfolio for Squared consisted primarily of credit default swaps ('CDS') referencing other CDO securities who value was tied to the United States residential housing market. J.P. Morgan Securities structured and marketed this $1.1 billion 'CDO squared' in early 2007 when the housing market and the securities referencing it were beginning to show signs of distress. Synthetic CDO squares were designed to, and did, result in leveraged exposure to the housing market and therefore magnified losses when the United States housing market experiences a downturn. J.P. Morgan Securities' marketing materials for Squared -- including the pitch book, term sheet, and offering circular -- all represented that the investment portfolio of Squared was selected by GSCP (NJ) L.P. ('GSC'), a registered investment adviser with experience analyzing credit risk in CDOs. Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Magnetar Capital LLC ('Magnetar'), with economic interests adverse to investors in Squared, play a significant role in the portfolio selection process with the knowledge of J.P. Morgan Securities."