Florida Reaches $25 Million Settlement With J.P. Morgan
Florida has reached an agreement with J.P. Morgan Securities (JPM) for $25 million to resolve allegations that it sold unregistered securities to a state run municipal money market fund that suffered a run on deposits because it held defaulted debt. The settlement announced by Attorney General Bill McCollum, will reimburse participants in Florida’s Local Government Investment Pool $23 million for money lost in the mortgage backed securities (MBS) and the remaining $2 million will reimburse the state for investigative and administrative costs.
According to the press release, assets in what was once the largest U.S. manager of municipal cash plunged from $27 billion in November 2007 to around $6.9 billion after it said it held defaulted mortgage backed bonds. Some communities were unable to pay workers, after a run by municipalities to pull money out of the fund forced a freeze on withdrawals. The fund has since been renamed Florida Prime after being reorganized to segregate the defaulted securities under a plan from New York based BlackRock, Inc., the largest publically traded U.S. money manager.
If your municipality or non-profit has suffered losses from investments in mortgage backed securities (MBS), please contact our securities law firm for a confidential, no obligation consultation at 1-800-259-9010.