SOURCE: Paragon Financial Limited

Paragon Financial Limited

October 03, 2012 08:20 ET

Fed Supports JPMorgan Lawsuit -- Warns Banks More Lawsuits Could Be Upcoming

The Paragon Report Provides Stock Research on Morgan Stanley and Wells Fargo & Company

NEW YORK, NY--(Marketwire - Oct 3, 2012) - A day after New York Attorney General Eric Scheiderman sued the now JPMorgan-owned Bear Stearns for fraud involving the creation and sale of mortgage-backed securities, the government has warned there will be more lawsuits to come. "There are more cases to come," Schneiderman said in a news conference. "We're investigating the misconduct of folks... that brought about the crash of 2008." The Paragon Report examines investing opportunities in the Banking Industry and provides equity research on Morgan Stanley (NYSE: MS) and Wells Fargo & Company (NYSE: WFC).

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This was the first lawsuit filed by President Obama's Residential Mortgage Backed Securities working group. The group, which was created in January, includes the Justice Department, the Securities and Exchange Commission, the New York Attorney General's Office, and the Federal Housing Association Inspector General.

The lawsuit says that Bear Sterns "systematically failed to fully evaluate the loans, largely ignored the defects... and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans."

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The Wall Street Journal recently reported that Merrill Lynch has offered some top brokers from Morgan Stanley $1.5 million to defect. The recent technological and reputational problems at Morgan Stanley have provided an opportunity for Merrill Lynch to approach top earning brokers. According to the WSJ Merrill has provided certain managers with lists of Morgan Stanley advisers to target, mostly those with shorter contracts.

Wells Fargo & Company is a nationwide, diversified, community-based financial services company with $1.3 trillion in assets. The company is scheduled to announce its third quarter 2012 earnings before market open on Friday, October 12, 2012. Analysts at Deutsche Bank recently downgraded Wells Fargo to "hold" from "buy".

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