* Settle suit over bankrupt lender's collapse
* Others settling Credit Suisse and Morgan Stanley
* Banks do not admit wrongdoing
By Emily Chasan
NEW YORK, Oct 9 JPMorgan Chase & Co (JPM.N),
Credit Suisse Group CSGN.VX and Morgan Stanley (MS.N) have
agreed to pay $100 million to settle a lawsuit over their role
in the collapse of a Philadelphia mortgage lender, an attorney
said on Friday.
The attorney, who represents the trustee charged with
liquidating the lender, American Business Financial Services
Inc ABFIQ.PK, said the banks agreed to the settlement on Oct.
The trustee had charged that the banks improperly helped
prop up the lender when its business of lending to subprime
borrowers was actually dead. Some 22,000 debt investors were
left in the lurch when the lender collapsed into bankruptcy in
Under the terms of the settlement, which is subject to
court approval, JPMorgan will pay $55 million to settle claims
against itself and Bear Stearns, Credit Suisse will pay $37.5
million, and Morgan Stanley will pay $7.5 million, the
attorney, Steven Coren of Philadelphia law firm Kaufman Coren &
The companies denied any wrongdoing.
Coren said it was the first case he was aware of in which
major banks have settled over their role in the collapse of a
Representatives for JPMorgan, Credit Suisse and Morgan
Stanley declined to comment.
ABFS filed for bankruptcy in January 2005, listing debts of
more than $1 billion. The trustee has sought to recover as much
as $750 million from the lenders' banks, auditors and former
directors and officers, on behalf of the firm's creditors.
The trustee previously reached a $33 million settlement
with the former directors and officers of ABFS, and a $20
million settlement with Blank Rome LLP, the Philadelphia law
firm that represented ABFS, Coren said.
The trustee is still involved in arbitration with auditor
The case is In re: American Business Financial Services
Inc, U.S. Bankruptcy Court, District of Delaware, No.
(Reporting by Emily Chasan; editing by John Wallace)