A legal suit had been initiated against J.P.Morgan and Bank of America by Sealink Funding Ltd over the mortgage debt loses. The plaintiff said it had bought residential mortgage-backed securities (RMBS) worth USD 2.4 billion from JPMorgan and USD 1.6 billion from Bank of America from 2005 to 2007, trusting upon the offering materials that were deceptive about the quality of the securitised loans. The defendants in order to secure a triple A reward for its RMBS had deliberately provided false information to the credit rating agencies. Similar claims had been raised by Germany’s Landesbank Baden-Wurttemberg in a separate lawsuit against JPMorgan over USD 500 million of RMBS that it bought. The lawsuits accused the banks for packaging several high risked mortgages by the issuers with the motive of high profits. This had in turn resulted in higher rates of default on the loans underlying the defendants’ RMBS and immense downgrades of the investors’ certificates. The investors through the lawsuits filed on Thursday in the New York State Supreme Court in Manhattan sought Compensatory and castigatory damages. Lawrence Grayson, spokesman for Bank of America said that the bank will proceed with the action of defence against the lawsuit which was just another one initiated by a “sophisticated investor”  for the purpose of blaming someone for losses caused by economic recession. JPMorgan spokeswoman Jennifer Zuccarelli refused to remark.

Reported by Lydia Chitra Jacob