J.P. Morgan to Pay $500 Million to Settle Lawsuit

By Julie Steinberg 

J.P. Morgan Chase & Co. has agreed to pay roughly $500 million to settle a class-action lawsuit over nearly $18 billion worth of shoddy mortgage-backed securities sold by Bear Stearns Cos., according to a court document and a person familiar with the matter.

Lawyers for the plaintiffs, led by a group of pension funds, filed a letter in U.S. District Court in Manhattan Thursday in which they stated "the parties have reached an agreement in principle" to resolve the lawsuit. J.P. Morgan purchased Bear Stearns in 2008 during the financial crisis.

The lawyers in the letter asked the court to set a deadline of Feb. 2 for both sides to submit details of the plan and ask for the court's preliminary approval.

The proposed settlement doesn't resolve another class-action lawsuit J.P. Morgan is currently facing over securities it itself sold. The New York bank had previously settled other litigation pertaining to mortgage products from Washington Mutual Inc., whose assets J.P. Morgan purchased in 2008.

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