Courtesy of Pam Martens.
Robert Khuzami, SEC Enforcement Chief
If only JPMorgan had been privy to those titillating emails from the Bear Stearns guys packaging the residential mortgage backed securities (RMBS) – the emails calling the bombs they were preparing to unload on investors a “sack of shit,” or “a shit breather,” and urging colleagues to “close this dog.” JPMorgan might not have been so willing to step up to the plate at the beckoning of the New York Fed and acquire Bear Stearns as it teetered toward bankruptcy in March of 2008.
But packaging toxic mortgage backed securities and internally calling them disparaging names while failing to share that view with investors is becoming very old news on Wall Street. What is shocking news, even to veterans on Wall Street, is that Bear Stearns is alleged, by both the Securities and Exchange Commission and the New York State Attorney General, Eric Schneiderman, to have engaged in an extensive multi-year, pre-meditated plan to steal tens of millions of dollars that belonged to trusts set up for investors.
Even on Wall Street, outright theft used to mean something. But in the SEC complaint and settlement announced last Friday and the lawsuit filed by the New York State Attorney General on October 1 of this year, the individuals who participated in this theft and fraud are not named; only the Bear Stearns firms, which now carry a JPMorgan moniker, were named as defendants.
The SEC press release expresses this grand larceny as casually as though one were reading about an adolescent shop-lifting a candy bar at the corner deli:
“ J.P. Morgan also is charged for Bear Stearns’ failure to disclose its practice of obtaining and keeping cash settlements from mortgage loan originators on problem loans that Bear Stearns had sold into RMBS trusts. The proceeds from this bulk settlement practice were at least $137.8 million.”
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