The Oklahoma Police Pension and Retirement System has sued U.S. Bancorp alleging that the bank failed to ensure that the securities sold to the fund were backed by loans properly transferred to trusts, according to a Bloomberg report.
This has caused, the police pension fund said, investors to suffer millions of dollars in losses.
In a complaint filed yesterday in the federal court in Manhattan, the Oklahoma police fund said that U.S. Bancorp knew that the mortgage loans underlying the bonds were not properly transferred to the trusts.
Bear Stearns, before it was acquried by JPMorgan Chase, securitized the mortgage loans. As the trustee for the two trusts subject to the lawsuit, U.S. Bancorp had to take steps to ensure the securities sold to investors were properly backed by mortgages, according to the Bloomberg report.
U.S. Bancorp’s failures meant securities purchased by investors “were not, in fact, legally collateralized by mortgage loans,” according to the police pension fund's court filing.
The pension fund filed the complaint as a class-action lawsuit that seeks to represent other investors.