Tuesday, March 08, 2011

JPMorgan settles fraud lawsuit over missing bonds

* Bank accused of deleting records, no wrongdoing admitted

* Judge grants preliminary OK of redemption program

* JPMorgan says to pay bondholders who present valid bonds (Adds JPMorgan comment and lawyer's comment)

By Jonathan Stempel

NEW YORK, March 7 (Reuters) - JPMorgan Chase & Co (JPM.N) has settled a lawsuit accusing it of defrauding bond investors out of at least $1.2 billion through bad record keeping, court records show.

The settlement of the five-year-old case comes as banks' ability to handle paperwork faces intense scrutiny, especially over their mortgage operations.

Investors had accused JPMorgan of deleting records on $46.8 billion of bonds from roughly 6,500 bond issues that had not been cashed in, and then covering up its mistakes.

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