By Aruna Viswanatha 
 
 Dec 17 (Reuters) - The U.S. credit union regulator sued JPMorgan Securities and Bear Stearns & Co on Monday over $3.6 billion in mortgage securities the bank allegedly sold to credit unions that collapsed because of losses from the securities. 
 
 The lawsuit by the National Credit Union Administration is its second against JPMorgan involving losses to credit unions. In June 2011 the agency sued it over some $1.4 billion in securities in which JPMorgan was the underwriter and seller. That suit is still pending. 
 
 The actions add to a growing list of cases the largest U.S. bank is fighting over conduct by Bear Stearns, which JPMorgan acquired in 2008. 
 
 After the New York Attorney General sued JPMorgan in October alleging that Bear Stearns deceived investors buying mortgage-backed securities in 2006 and 2007, the bank's chief executive, Jamie Dimon, lashed out at the government. 
 
 Speaking at a Washington event, Dimon said the company lost $5 billion to $10 billion in Bear Stearns-related costs and is still paying the price for doing the Federal Reserve "a favor" by buying the teetering investment bank. 
 
 In the Monday lawsuit, the NCUA alleged that Bear Stearns made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central, Western Corporate, Southwest Corporate and Members United Corporate federal credit unions. 
 
 The lawsuit, filed in federal court in Kansas, is the largest such lawsuit the regulator has filed to date. 
 
 A JPMorgan spokeswoman declined to comment. 
 
 In the past two years the agency has brought similar actions against Barclays Capital, Credit Suisse, Goldman Sachs, RBS Securities, UBS Securities, Wachovia and others. 
 
 Most of the cases are pending, but it has settled claims against Citigroup, Deutsche Bank Securities and HSBC for around $170 million. 
 
 The credit union regulator has been trying to recover losses related to the failure of five institutions that it seized in 2009 and 2010 after they ran into trouble due to the crumbling housing market. 
 
 The wholesale credit unions have experienced more troubles than their retail counterparts because they did not face the same restrictions on permitted investments, leading to big losses during the financial crisis. ||||| Commuters are reflected in stone as they walk past the JP Morgan headquarters in New York, May 17, 2012. 
 
 NEW YORK (Reuters) - New York Attorney General Eric Schneiderman filed a civil fraud lawsuit against JPMorgan Chase & Co (JPM.N) on Monday over mortgage-backed securities packaged and sold by Bear Stearns. 
 
 It was the first action to come out of a working group created by President Barack Obama earlier this year to go after wrongdoing that led to the financial crisis. 
 
 JPMorgan, which bought Bear Stearns for $10 a share in March 2008, said in a statement it would contest the allegations. 
 
 The suit accuses Bear Stearns of failing to ensure the quality of loans underlying residential mortgage-backed securities it packaged and sold in 2006 and 2007. Investors lost more than $22.5 billion on more than 100 of those securities, or one-quarter of their original value, the lawsuit said. 
 
 The lawsuit said there were "serious long-standing concerns" about the quality of reviews done by Bear Stearns, and that defects uncovered among the loans sold to investors were largely ignored. 
 
 The due diligence process was compromised "in order to increase their volume of securities", the complaint says. 
 
 It also alleged a "systematic abandonment of underwriting guidelines". 
 
 JPMorgan noted in its statement that the allegations concern actions by Bear Stearns before the investment bank was acquired by JPMorgan. 
 
 "The NYAG civil action relates to Bear Stearns, which we acquired over the course of a weekend at the behest of the U.S. Government. This complaint is entirely about historic conduct by that entity," the statement said. 
 
 SIMILAR CASES TO FOLLOW 
 
 Schneiderman, a co-chair of the working group, told Reuters on September 20 that his office would take action shortly and that he expected federal authorities to do so as well. 
 
 People familiar with the matter said a federal-state announcement was planned for Tuesday and Schneiderman's filing the case on Monday appears to have irked his federal colleagues. 
 
 Two federal officials familiar with the investigation said that while the lawsuit was brought under New York State law, much of the investigation was handled at the federal level. 
 
 Schneiderman's lawsuit, filed in New York State Supreme Court in Manhattan, was based on the Martin Act, New York State's powerful securities fraud statute, which does not require proof of intent to deceive. 
 
 Similar cases against other banks will follow, according to a person familiar with the lawsuit. 
 
 This is not the first time Bear Stearns has emerged as a central figure in the financial crisis. In June 2008, two former Bear Stearns hedge fund managers were charged by federal prosecutors with lying to investors about the financial health of their funds, which had invested heavily in mortgage securities backed by subprime loans. 
 
 The managers were acquitted in a case that still stands as one of the few criminal prosecutions against Wall Street bankers to emerge from the financial crisis. 
 
 Monday's lawsuit comes in a tumultuous year for JPMorgan and Chief Executive Jamie Dimon. Federal authorities are currently investigating a nearly $6 billion trading loss in JPMorgan's chief investment office. Last month, U.S. power regulators asked the bank to demonstrate that it did not violate federal regulations by submitting misleading information and omitting facts in dealings with the regulator and California's electricity grid operator. 
 
 The Residential Mortgage-Backed Securities Working Group was formed to probe the pooling and sale of risky mortgages in the run-up to the 2008 financial crisis. 
 
 Obama, who is scheduled to debate his Republican rival Mitt Romney on Wednesday night, said in January he was creating the group to "hold accountable those who broke the law" and to "help turn the page on an era of recklessness". 
 
 The task force includes the Justice Department, the Securities and Exchange Commission, the Department of Housing and Urban Development and the Internal Revenue Service. 
 
 The case is People v. J.P. Morgan Securities LLC, 451556/2012 New York state Supreme Court (New York County). 
 
 (Additional reporting by Aruna Viswanatha Editing by Andre Grenon and Edmund Klamann)
– JPMorgan is staring down a lawsuit over Bear Stearns' alleged mortgage-backed securities misconduct. The National Credit Union Administration, the federal regulator that oversees credit unions, has sued the big bank, alleging that Bear Stearns misled the credit unions it sold $3.6 billion in securities to, causing many to collapse, Reuters reports. JPMorgan, which bought Bear Stearns when it was on the brink of collapse in 2008, has declined to comment. In other regulatory-actions-against-banks news, Morgan Stanley has agreed to pay Massachusetts a $5 million fine for its widely-criticized handling of Facebook's IPO. Massachusetts' Secretary of the Commonwealth said Morgan Stanley had engaged in "dishonest and unethical practices" in influencing research analysts before the offering, Bloomberg reports.