The SEC has filed a lawsuit against Bear Stearns, JPMorgan Chase & Co. and other investment companies alleging they failed to disclose information regarding the handling of mortgage-backed securities. Bear Stearns purchased the securities from J.P. Morgan and others beginning in 2005. The lawsuit alleges Bear Stearns would then sell the securities back to the originators, but at a reduced rate. As a result, Bear Stearns was losing money on these transactions, adversely affecting investors. The lawsuit seeks unspecified damages on behalf of such investors.

The federal mortgage task force that was formed in January by the Justice Department filed its first complaint against a big bank on October 1, 2012, citing a broad pattern of misconduct in the packaging and sale of mortgage securities during the housing boom. The civil suit against The Bear Stearns Companies, LLC, now a unit of JPMorgan Chase, was brought in New York State Supreme Court by Eric T. Schneiderman, the attorney general who is also a co-chairman of the task force, known as the Residential Mortgage-Backed Securities Working Group. The complaint contends that Bear Stearns and its lending unit, EMC Mortgage LLC, defrauded investors who purchased mortgage securities packaged by the companies from 2005 through 2007. The firms made material misrepresentations about the quality of the loans in the securities, the lawsuit said, and ignored evidence of broad defects among the loans that they pooled and sold to investors. Moreover, when Bear Stearns identified problematic loans that it had agreed to purchase from a lender, it was required to make the originator buy them back. But Bear Stearns demanded cash payments from the lenders and kept the money, rather than passing it on to investors, the suit contends. The allegations in the suit against Bear and EMC are not new. The task force complaint closely echoes legal arguments made in recent years by numerous private litigants trying to recover losses in mortgage securities. Most of these cases continue to inch their way through the courts. The complaint contends that Bear Stearns defrauded investors when it assured them of the stringent reviews being made of the loans the firm was bundling. 'Rather than carefully reviewing loans for compliance with underwriting guidelines'. The suit was brought under New York’s Martin Act, the state law that gives the attorney general wide latitude to bring fraud cases without demonstrating a defendant intended to defraud. The suit does not seek specific damages but asks for restitution for investors victimized by the deceptive practices and disgorgement of money received in connection with the fraud.

The receiver for the failed Austin-based Guaranty Bank is demanding in three separate lawsuits more than $2.1 billion from major banks that underwrote and sold securities backed by residential mortgages. The Federal Deposit Insurance Corp. is claiming the banks pushed and sold the securities with false statements about the quality of the underlying mortgages. It's demanding $900.6 million from companies that charged Guaranty Bank $1.8 billion for eight certificates. The companies are: Ally Securities; Goldman Sachs & Co.; Deutsche Bank Securities; J.P. Morgan Securities; Structured Asset Mortgage Investments II; and The Bear Stearns Co. s. In a second complaint, the FDIC demands $677.4 million from another set of companies that charged Guaranty Bank $2.1 billion for 20 certificates. They are: J.P. Morgan Securities fka Bear, Stearns & Co.; Merrill Lynch Pierce Fenner & Smith; RBS Securities; WaMu Asset Acceptance Corp.; and WaMu Capital Corp. In the third complaint, the FDIC is demanding $559.7 million from companies that charged Guaranty Bank $1.5 billion for eight certificates: Countrywide Securities Corp.; CWALT Inc.; Countrywide Financial Corp.; Bank of America Corp.; Deutsche Bank Securities; and Goldman Sachs & Co. In August 2009, Guaranty Financial Group Inc. filed a petition in U.S. Bankruptcy Court, on the heels of the decision by the FDIC to shut down the company and Guaranty Bank branches. The bank reported liabilities of $323 million, against assets of only $24.3 million following an FDIC sale. Guaranty operated 103 locations in Texas, 12 in the Austin area. Nationally, it was the second-largest bank to fail during 2009. The majority of Guaranty's $12 billion in assets were sold to BBVA Compass, the U.S. banking arm of Spanish financial giant Banco Bilbao Vizcaya Argentaria SA.