In March of 2008 Bear Stearns was collapsing. Its share price plunged from $67 a share to less than $5 a share in the span of a few days. In stepped JP Morgan Chase, snapping up the faltering Bear Stearns for a bargain and looking like it was in the clear — until now.  

New York’s Attorney General has charged Bear Stearns’ mortgage unit with fraud over some of its mortgage-backed securities.  And, as the proud owner of Bear Stearns, JP Morgan may have to foot the bill.  

“It’s a little bit like buying a dog,” says James Cox, a professor of Securities Law at Duke University.  “You get the dog, but you get the fleas with it.”  

Cox thinks we’ll start seeing more cases like this one. “This is the most visible broad-based prosecution by a public agency of investment banks,” he says. “It resonates with what the public’s general attitude is.”  

And that is angry and hungry for someone to be held accountable for the financial crisis, says Dartmouth business school professor Matt Slaughter.  

“There still is, in America, this pervasive sense of unfairness and lack of responsibility in the wake of the world financial crisis,” he says. 

But is it fair that JP Morgan take the hit for the alleged sins of a company it bought?  John Coffee, a law professor at Columbia University, says that risk was baked into the deal. And it was a deal.  JP Morgan paid about $1.5 billion for Bear Stearns.  Bear Stearns’ building alone was worth about that.  

“The government also provided very attractive financing to JP Morgan,” says Coffee. “So there was the bitter and the sweet and you can’t separate the two.”

JP Morgan may find itself in the same boat as one of its competitors. Bank of America has paid out billions of dollars to settle lawsuits around alleged wrongdoing by two troubled companies it bought: Countrywide and Merrill Lynch.