Ambac Financial Group Inc., the bond insurer that last month won court approval to emerge from bankruptcy, has sued JPMorgan Chase & Co. to recover losses on securities it insured that were made by a unit of the former Bear Stearns Cos.
Ambac said it has incurred more than $200 million of claims on seven residential mortgage-backed securities transactions dating from 2006 that Bear fraudulently induced it to enter. It said these securities have lost more than $1.8 billion overall.
“Driven by management’s ‘Bear don’t care’ mentality, Bear Stearns perpetrated a massive fraud that deceived investors and financial guarantors, such as Ambac, into believing that the mortgage loans backing its securitizations were originated pursuant to established underwriting guidelines and were therefore of good quality,” Ambac said.
The lawsuit, which was filed in New York state Supreme Court in Manhattan, is Ambac’s second against JPMorgan arising from activities at Bear and its EMC Mortgage unit. JPMorgan bought Bear Stearns in 2008.
JPMorgan did not immediately return a call seeking comment.