JPMorgan's Win in Fraud Case May Be Victory for Other Banks

JPMorgan Chase won a court victory that may have saved it $769 million dollars.

FSA Asset Management and subsidiaries of the French bank Dexia SA sought damages of $774 million for fraud in 65 mortgage-backed securities sold by Bear Stearns , JPMorgan or Washington Mutual , according to court documents.

FSAM was the original purchaser of the 65 certificates in question. It sold 60 of them to Dexia.

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Judge Jed Rakoff, of the Southern District of New York, threw out all Dexia's claims.

Rakoff's decision was based on an arcane point of law that says fraud claims don't transfer to secondary buyers unless they are specifically assigned.

In the suit, JPMorgan alleged there was no fraud involved. But even if there were, the judge's ruling means that Dexia would be out of luck.

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The ruling leaves only five certificates in the lawsuit and cuts JPMorgan's liability to an estimated $5.7 million, according to court documents.

JPMorgan declined to comment. Lawyers for the plaintiffs could not be reached.

Rakoff's decision could drastically cut future liabilities related to mortgage-backed securities suits for JPMorgan and other banks.

-By CNBC's Margaret Popper; Follow her on Twitter:

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