Virginia Attorney General Mark R. Herring (D) on Monday dropped JPMorgan Chase from a mortgage-securities lawsuit against the country’s biggest banks after learning that his predecessor, Ken Cuccinelli II (R), had struck a confidential settlement with the bank.
The decision comes a week after Herring announced a $1.15 billion lawsuit against 13 of the country’s biggest banks for misleading a state retirement fund about the quality of bonds made up of residential mortgages. JPMorgan and its Washington Mutual subsidiary were named in the suit, along with Citigroup and Bank of America, for packaging faulty home loans into securities sold to the Virginia Retirement System (VRS).
According to Herring’s office, the pension fund failed to inform the attorney general that the previous administration had reached a $3 million settlement with JPMorgan in 2013. Terms of that agreement are confidential, according to attorney general spokesman Michael Kelly, who declined to provide details of the settlement. He said the agreement “precludes further action at this time.”
Officials at JPMorgan declined to comment on Herrring’s decision, as did those at VRS.
Kelly said the case against the remaining 11 banks will go forward. The lawsuit is the largest financial fraud action ever brought by Virginia. It parallels legal actions being taken across the country by attorneys general seeking redress for state pension funds that lost millions of dollars in the financial crisis.
VRS, which has 600,000 members, purchased 220 residential-mortgage-backed securities starting in 2004. When the financial markets tanked and the value of those bonds took a nose dive, the fund was forced to sell the vast majority of the securities and lost $383 million.
— Danielle Douglas-Gabriel
Alibaba’s initial public offering now ranks as the world’s biggest at $25 billion, netting underwriters of the sale a more than $300 million windfall after the e-commerce giant and some shareholders parted with additional shares.
The fees are equivalent to 1.2 percent of the total deal, with Alibaba paying $121.8 million in commissions. Selling shareholders are set to pay an additional $178.6 million, according to a Monday filing with the Securities and Exchange Commission.
Overwhelming demand resulted in the IPO initially raising $21.8 billion, and then sent Alibaba Group Holding’s stock surging 38 percent in its debut Friday. That prompted underwriters to exercise an option to sell an additional 48 million shares, said a person with direct knowledge of the deal who declined to be identified because details of the additional sale have yet to be made official.
That means the IPO has surpassed a previous global record set by Agricultural Bank of China in 2010, when the lender raised $22.1 billion.
According to its prospectus, Alibaba had agreed to sell 26.1 million additional shares under the option, and Yahoo an additional 18.3 million, netting the two companies an extra $1.8 billion and $1.2 billion, respectively.
Alibaba’s Jack Ma had agreed under the same option to sell an extra 2.7 million shares, and company co-founder Joe Tsai agreed to 902,782 additional shares.
Alibaba’s shares dropped 4.3 percent to $89.89 Monday.
● Chrysler Group is recalling an estimated 230,760 SUVs globally to install a new part to prevent a fuel pump issue that could cause the vehicles to stall or not start. Chrysler, a unit of Fiat, said that in an internal review it discovered that some fuel-pump relays in certain 2011 Jeep Grand Cherokee and Dodge Durango SUVs were susceptible to deformation. The recall covers an estimated 188,723 SUVs sold in the United States, the company said.
● The death toll from crashes involving General Motors small cars with faulty ignition switches is at least 21. Attorney Kenneth Feinberg, who was hired by the automaker to compensate victims, said in an Internet posting Monday that he received 143 death claims as of Friday, and 21 of those have been deemed eligible for payments. The death toll rose from a week ago, when Feinberg had determined 19 claims would get payments. The Web site also said Feinberg received 532 injury claims as of Friday. Of those, 16 are eligible for compensation thus far.
● German drug company Merck said it has agreed to buy St. Louis-based chemical firm Sigma-Aldrich for $17 billion in a deal Merck said will strengthen its business in chemicals and laboratory equipment. Darmstadt-based Merck said it is paying $140 per share in cash for all of Sigma-Aldrich’s shares — a premium of 37 percent over Friday’s closing price of $102.37.
● German electronics and engineering company Siemens has reached a deal to acquire oilfield equipment maker Dresser-Rand for $7.6 billion. Siemens will pay $83 per common share of Dresser-Rand Group, $3.09 more than the company’s closing share price Friday.
— From news services