It's been months since New York Attorney General ""Eric Schneiderman"":http://www.ag.ny.gov/ filed suit against ""JPMorgan Chase"":http://www.jpmorganchase.com/corporate/Home/home.htm over faulty mortgage-backed securities (MBS), but the bank is now coming out of its own corner swinging.[IMAGE]
Schneiderman ""filed his complaint"":http://www.themreport.com/articles/government-task-force-files-suit-against-jpmorgan-2012-10-02 against JPMorgan Chase, JPMorgan Securities, and EMC Mortgage in October 2012, alleging that the defendants used fraudulent practices to underwrite and sell securities to investors. Many of the securities were sold by Bear Stearns, which was acquired by JPMorgan after collapsing in 2008.
The suit came as a shock after months of apparent inactivity from the Residential Mortgage-Backed Securities (RMBS) Working Group, a state-federal task force created to investigate ""misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities."" Schneiderman co-chairs the group.
Attorneys for the bank ""filed a motion"":https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=uyDvzNMzGr5DOEVbxazXcQ==&system=prod to dismiss in early January, arguing that because Schneiderman brought his claims under the Martin Act (an article granting New York's attorney general increased power to combat financial fraud), they are subject to a three-year statute of limitations that has already elapsed.
""In short, the Attorney General's Complaint does not try to plead the elements of common law fraud. It makes no attempt to plead alleged misrepresentations with the requisite particularity and it includes not a single allegation of scienter or reliance,"" the motion reads. ""For this reason, the Attorney General's Complaint cannot take advantage of the six-year statute of limitations for actions based on fraud, mandating its dismissal under the three-year statute of limitations for statutory claims.""
That isn't the only problem JPMorgan's attorneys point out. Even if Schneiderman's claim was timely enough for consideration, it lacks specificity, they argue.
""The Complaint alleges misrepresentations in connection with three different areas ... But these alleged misrepresentations are pleaded in a vague and imprecise manner. The complaint does not specify the particular documents in which specific alleged misrepresentations were made, does not identify the specific securitizations at issue, does not describe the specific bases for believing that these representations were untrue, and does not identify any investors who relied on any such representations and were misled.""
The bank's success or failure in dismissing the case could impact other disputes down the line. Schneiderman and the RMBS Working Group have already brought a similar claim against ""Credit Suisse"":http://www.themreport.com/articles/securities-task-force-takes-aim-at-credit-suisse-2012-11-21, and it's likely there will be more complaints against other financial institutions.
The attorney general's office did not immediately return a request for comment. However, in a statement to ""Bloomberg"":http://www.bloomberg.com/news/2013-01-07/jpmorgan-asks-court-to-dismiss-n-y-mortgage-suit-as-late.html, a spokesperson for Schneiderman said, ""We are confident that our office will prevail, and that those responsible for the misconduct that led to the crash of the housing market and the collapse of the American economy will be held accountable.""