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February 11, 2014

Legality of JPMorgan’s $13bn settlement with DoJ tested

“The US justice department reached a secretive, backroom deal when it agreed to a landmark $13bn settlement with JPMorgan Chase to resolve allegations that the bank mis-sold mortgage securities, according to a lawsuit filed on Monday.

“Better Markets, a non-profit group that promotes the public interest in financial markets, is asking a court to declare the settlement unlawful and issue an injunction to prevent the DoJ from enforcing it until it has been reviewed and approved by a judge.

“Better Markets said the DoJ violated the US Constitution and US laws by using a contract agreement to settle with JPMorgan without subjecting it to independent judicial review. Better Markets added that the agency cannot act as “investigator, prosecutor, judge, jury, sentencer and collector, without any checks on its authority”.

“Legal experts say the Better Markets lawsuit may face difficulties given that the DoJ often settles civil matters out of court, which is allowed as long as the settlement is made public. The agency also has broad discretion when it comes to civil cases.”

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Read full Financial Times article here

 
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