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Credit Suisse to fight $10bn mortgage suit

Switzerland-based Credit Suisse Group will appeal against a $10bn US lawsuit that was filed by the New York Attorney General’s office in relation to the sale of mortgage-backed securities.

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The bank had requested for a dismissal of the case that had been filed in 2012. However, its request was rejected by the New York State Supreme Court.

Credit Suisse has been accused by New York Attorney General Eric Schneiderman of misrepresenting the quality of esidential mortgage-backed securities during 2006 and 2007.

According to the lawsuit, investors have suffered losses of close to $11.2bn on the securities.

Last year, the bank had responsed to the lawsuit arguing that New York had missed a three-year deadline for suing. However, the state countered that by saying that it had six years to file its complaint.

Bidness Etc reported that in the original complaint, the plaintiff said that Credit Suisse had made the investors believe that the bank had carefully evaluated and would continue to monitor the quality of residential mortgage-backed securities under question.

The lawsuit said: "In fact, defendants systematically failed to adequately evaluate these loans, and kept investors in the dark about the inadequacy of their review procedure."

After its request was rejected, Switzerland’s second largest bank said in a statement: "We will appeal this particular decision and continue to defend ourselves in this case."

Recently the bank agreed to pay more than $2.5bn in penalties to settle a criminal charge that it helped Americans evade taxes.

Reuters reported that the bank added a net $395m to its litigation provisions in the third quarter, without saying what the provision was for.


Image: The lawsuit has alleged that investors have suffered losses of close to $11.2bn on securities. Photo: courtesy of sheelamohan/freedigitalphotos.net.