New York, NY, United States (4E) – A non-profit group on Monday filed a lawsuit against the U.S. Department of Justice over the record $13bn settlement it had with JPMorgan Chase & Co., saying the deal to resolve probe into toxic mortgage investments was unconstitutional as it was not reviewed by the courts.
The public interest group Better Markets, which helps promote the interest of the public in financial markets, is urging a court to declare the settlement illegal and issue an injunction to keep the Justice Department from enforcing it until a judge has reviewed and approved the agreement.
In November, JPMorgan agreed to pay the largest settlement ever by a U.S. firm following negotiations, which included Attorney-General Eric Holder and JPMorgan CEO Jamie Dimon.
Under the deal, the Wall Street lender will pay a $2bn civil penalty and another $4bn to provide assistance to struggling homeowners across the country. The company also admitted to knowingly sell faulty mortgage-backed securities that spurred the subprime housing bubble and the subsequent financial crisis.
The Better Markets lawsuit could face challenges as the Justice Department is allowed to settle civil matters outside the courts as long as the settlement is publicly disclosed, according to legal experts. The agency also has a wide discretion regarding civil cases.