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JPMorgan Chase settles business dispute with investors

New Jersey residents may be aware that JPMorgan Chase is the largest bank in the United States in terms of assets. However, by the time the bank is finished settling all of the claims that arose from the housing market crash, it may lose that status. The latest in these claims comes from a business dispute with 21 institutional investors.

The investors in question lost a good deal of money prior to the housing market crash on mortgage-backed securities. Now, it will be up to the group's trustees to approve a $4.5 billion settlement. This amount is not included in the nearly $13 billion preliminary settlement to the United States government regarding this same issue.

The settlement with institutional investors was originally announced to be $6 billion, but there is some question as to whether JPMorgan Chase is responsible for the losses of Washington Mutual. This same issue has halted the settlement with the government as well. Regardless, JPMorgan Chase believes it has enough reserves to encompass these settlements and any remaining litigation on mortgage securities.

The deadline for trustees to accept the settlement of this business dispute is Jan. 15, 2014. Settling these disputes potentially saves JPMorgan money in the end by avoiding a trial. New Jersey businesses that find themselves involved in a business dispute may need to conduct a cost-benefit analysis as to whether settling the dispute will end up saving the company more money than could be spent in litigating the matter to conclusion. Sometimes, a company's money may be better spent in settlement negotiations than in the courtroom.

Source: Reuters, JPMorgan Chase to pay $4.5 billion in mortgage security deal, Karen Freifeld, Nov. 15, 2013

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