Regulators said the bank’s securities division had failed to tell customers that a hedge fund had helped select the portfolio and then bet it would fail, reported the BBC.
The fine means investors who lost as a result will get their money back.
According to the BBC, JP Morgan neither admitted nor denied any wrongdoing under the settlement.
The bank said it had lost nearly £555m ($900m) on the investment and it has reviewed similar mortgage investments and paid £34m ($56m) to some investors.
Yesterday, US credit union regulator the National Credit Union Administration announced it would sue both JP Morgan and the Royal Bank of Scotland for more than £493M ($800m) for allegedly misselling mortgage-backed securities.