text: 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. ||||| Morgan Stanley’s handling of Facebook Inc.’s (FB) initial public offering, a deal that cost investors billions of dollars, broke a decade-old pledge to block investment bankers from influencing analysts, according to Massachusetts regulators, who fined the bank $5 million. 
   
   A senior Morgan Stanley banker wrote a script that Facebook’s then-treasurer used to update research analysts on the company’s revenue outlook before the IPO, according to a settlement document with Secretary of the Commonwealth William Galvin. He faulted Morgan Stanley for dishonesty, ethics violations and failing to supervise employees -- the first regulatory claims to stem from the bank’s handling of the deal. 
   
   A plunge in Facebook’s stock after it began trading in May has fueled government probes and more than 40 lawsuits, with some investors claiming the social-network company failed to disclose revised forecasts before the IPO. The small size of Morgan Stanley’s fine relative to investors’ losses shows other regulators may struggle to pin much blame on the bank, said Erik Gordon, a professor at the University of Michigan’s Stephen M. Ross School of Business. 
   
   “They paid a little bit of lunch money as a fine, they’re not getting disqualified, and they agreed once again to abide by a consent order they agreed to nine years ago,” Gordon said yesterday. “Coming from Massachusetts, where they could’ve gotten hit a lot harder, if anything, this is not encouraging to attorneys general.” 
   
   Influenced Research 
   
   Wall Street banks including Morgan Stanley agreed in 2003 to overhaul internal controls and wall off businesses after regulators found some firms let investment bankers influence analyst research. The abuses, which resulted in analysts recommending clients buy into IPOs handled by their own firms, helped fuel an Internet stock bubble that burned investors. 
   
   The Massachusetts consent order describes the process by which Facebook, with Morgan Stanley’s (MS) advice, put out a public filing alerting investors to negative revenue trends related to mobile advertising. Facebook’s treasurer at the time, working from a Philadelphia hotel, then called research analysts and gave them more-detailed estimates of the impact those trends would have on revenue in the second quarter and all of 2012, according to the document. The treasurer and the senior investment banker had rehearsed the conversations beforehand. 
   
   As calls took place, “I was far down the hall so I wouldn’t hear anything,” the banker told investigators, according to the order. “I took extra precaution to do that, and sat on the floor,” he said. The banker had e-mailed another executive that night to say the treasurer “was a champ.” 
   
   Specific Numbers 
   
   The order finds Morgan Stanley in violation of securities law against dishonest and unethical practices, without specifying what those practices were. Galvin, in a statement announcing the settlement, criticized the firm for helping Facebook provide analysts with more-detailed information than other investors received. 
   
   “While retail investors were left to interpret vague qualitative information” from a regulatory filing, analysts were given “specific numbers” to lower their revenue estimates, Galvin said in the statement. New York-based Morgan Stanley didn’t admit or deny Galvin’s claims in settling. 
   
   While the consent order didn’t name the investment banker involved, it said he had been employed at Morgan Stanley since May 1995 and worked in the bank’s Menlo Park offices. Michael Grimes, the firm’s global co-head of technology investment banking who helped lead the IPO, joined Morgan Stanley in May 1995 and works in those offices, according to records with the Financial Industry Regulatory Authority. 
   
   Grimes and a spokesman for Galvin’s office didn’t respond to messages seeking comment on the unidentified banker described in the complaint. Mary Claire Delaney, a spokeswoman for Morgan Stanley, declined to say whether Grimes is the banker. 
   
   Robust Compliance 
   
   “We are pleased to have reached a settlement with Secretary Galvin and the Massachusetts Securities Division and to have put this matter behind us,” Delaney said in an e-mailed statement. “Morgan Stanley is committed to robust compliance with both the letter and the spirit of all applicable regulations and laws.” 
   
   Ashley Zandy, a spokeswoman for Facebook, declined to comment on Morgan Stanley’s settlement. 
   
   Citigroup Inc. was fined $2 million by Massachusetts in October after a junior analyst improperly disclosed confidential information before Facebook’s IPO. 
   
   The U.S. Securities and Exchange Commission also is looking at the IPO, a person familiar with the probe said in October. 
   
   To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net 
   
   To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net
target: – 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.