New York sues Credit Suisse over mortgage securities
By Karen Freifeld | November 21, 2012 6:35 AM EST
Credit Suisse, Switzerland's second-largest bank, misrepresented the quality of loans underlying residential mortgage-backed securities it sponsored and underwrote in 2006 and 2007, leading to $11.2 billion in losses to investors, according to the lawsuit.
The Zurich-based bank failed to adequately evaluate the loans and ignored defects its limited review did uncover, the lawsuit said It also failed to perform due diligence it promised. The lawsuit was brought under a New York securities fraud statute known as the Martin Act.
Jack Grone, a spokesman for Credit Suisse in the United States, declined to make an immediate comment. The bank announced a management shake-up on Tuesday.
The action is the latest to come out of a working group created by President Barack Obama to go after wrongdoing that led to the 2008 financial crisis.
The lawsuit "marks another significant step in our efforts to hold financial institutions accountable for the misconduct that led to the worst financial crisis in nearly a century," Schneiderman said in a statement. He is co-chair of the group.
On Friday, the bank agreed to pay $120 million to settle U.S. civil charges that it misled investors in the sale of risky mortgage bonds prior to the crisis. JPMorgan Chase & Co
Schneiderman also brought a lawsuit against JPMorgan Chase last month over mortgage-backed securities packaged and sold by Bear Stearns & Co, which JPMorgan acquired during the financial crisis.
The working group's actions are viewed as a last shot for the government to hold banks and others responsible for misconduct in the run-up to the mortgage meltdown.
Credit Suisse, JPMorgan and other banks have already been sued by pension funds, insurers and others who claim they misrepresented the quality of mortgages underlying securities.
The case is People of the State of New York v. Credit Suisse Securities, 451802/2012, New York state Supreme Court, New York County.
(Reporting by Karen Freifeld; Editing by Steve Orlofsky)
Most Popular Slideshows
- Prince Harry & Camilla Thurlow Getting Serious, St. Tropez Holiday Before The Prince’s 30th Birthday [PHOTOS]
- 2014 US Open: Hottest Male Tennis Players To Watch [PHOTOS]
- What Happens When You Give Up Sex For 12 Months? – Dialogue With Peter Lynagh – Exclusive
- 2014 US Open: Hottest Female Tennis Athletes [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- 5.5-Inch iPhone 6 is iPhone Air on Sept 19 Release Date: 5 Things to Consider Before Buying
- Nexus 6 Release Date Update: Moto X+1 Look Leaked, Nexus X or Shamu Moved to Demo Phase
- HTC One M8 for Windows Vs. Nokia Lumia Icon, The Battle Of Windows Phones
- Leaker of Actresses Nude Photos Accepting PayPal Donations in Exchange For Posting Alleged Sex Video of Jennifer Lawrence, Has Naked Pictures of 100 Hollywood A-Listers
- ISIS Will Target the U.S. Power Grid, Former CIA Says; Could Tap Other Fellow Extremist Groups to Do the Job
- Jennifer Lawrence's Nude Photos Leaked on Find My iPhone, Apple 'Outraged' But Says Systems 'Not Breached'
- Russia Massacres Ukrainian Volunteer Battalions—Surviving Members Alleged