Assured Guaranty’s New EMC Complaint
Bermuda bond insurer Assured Guaranty Ltd. has come forward with three dozen new witnesses who it says will back a legal claim that it was defrauded by JPMorgan Chase & Co.’s EMC Mortgage unit in a $337 million mortgage-backed securities deal.
Lawyers for Hamilton, Bermuda-based Assured Guaranty filed a new complaint unsealed yesterday [Nov. 28] in a lawsuit accusing EMC and its parent at the time, Bear Stearns & Co., of misleading the bond insurer, reports the Bloomberg financial news service.
The complaint, which also names JPMorgan as a defendant, includes a new fraud claim and new allegations from insiders at EMC and elsewhere.
“The truth is now coming directly from Bear Stearns’ own former employees,” the insurer said in the complaint. “Seven confidential witnesses who were responsible for underwriting at EMC each have affirmed that they faced intense pressure to approve the purchase of high volumes of loans for Bear Stearns’ securitisations without adequate review.”
Bear Stearns is a defendant in two other lawsuits in federal court in Manhattan by guarantors of mortgage-backed deals who say they were defrauded by the bank, which collapsed in 2008, according to the complaint. Assured Guaranty said its complaint adds to those suits by citing accounts from insiders and other sources.
Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, declined to comment on the new complaint.
The suit focuses on a 2005 transaction known as SACO I Trust 2005-GP1, one of hundreds of securitisations by Bear Stearns from 2004 to early 2007. Assured Guaranty claims EMC knew that thousands of home-equity lines of credit that served as collateral for $337 million in securities it guaranteed were “junk” or otherwise flawed.
Assured Guaranty Ltd. is a publicly traded Bermuda-based holding company. Its operating subsidiaries provide credit enhancement products to the US and international public finance, infrastructure and structured finance markets
