US stock market daily report (February 10, 2014, Monday)
February 11, 2014, Tuesday, 05:27 GMT | 00:27 EST | 09:57 IST | 12:27 SGT
The U.S. Justice Department and Attorney General Eric Holder were sued in federal court in Washington on Monday by non-profit group Better Markets in an attempt to block what the group referred to as an "unlawful" $13 billion settlement with JPMorgan Chase & Co. (JPM-NYSE) over bad mortgage loans sold to investors before the financial crisis. Dennis Kelleher, chief executive of Better Markets, unveiled the lawsuit during a press conference at the National Press Club on Monday, armed with large posters including one with photos of Holder and JPMorgan Chief Executive Officer Jamie Dimon.
With the settlement reached in November, JPMorgan was not released from potential criminal liability over the mortgages it packaged into bonds. While the settlement was released to the public, it was not filed in federal court. Justice did not release a complaint that it had prepared to file against JPMorgan, before it negotiated the deal. While the Justice Department enters into non-prosecution agreements on the criminal side without filing them in court, it rarely enters into similar out-of-court settlements over civil violations, especially a record settlement of this size.
Better Markets was founded in 2010 to advocate for tough Wall Street reforms. The group is appalled that the settlement gave the JPMorgan "blanket civil immunity" for its conduct without sufficient judicial review. Better Markets is seeking to have the court prevent the Justice Department from enforcing the settlement until a judge reviews it.
Kelleher said, "The Wall Street bailouts were bad enough, but now taxpayers are being forced to accept a secretive backroom deal that may well have been another sweetheart deal. The Justice Department cannot act as prosecutor, jury and judge and extract $13 billion in exchange for blanket civil immunity to the largest, richest, most politically connected bank on Wall Street." Kelleher, a former attorney at Skadden, Arps, Slate, Meagher & Flom, has become well-known for his critique of both Wall Street banks and regulators who he has often accused of failing to hold banks accountable for wrongdoing.
In its complaint, Better Markets alleges the settlement with JPMorgan lacks critical facts that can help justify the deal, such as failing to name any individuals responsible for the wrongdoing, how much damage investors suffered or even which specific laws were violated. The complaint says, "No one has any ability to determine if the $13 billion agreement is fair, adequate, reasonable, and in the public interest or if this is a sweetheart deal entered into behind closed doors."