Another day in mortgage banking, another lawsuit: New York Attorney General Eric T. Schneiderman has filed a lawsuit against Credit Suisse Securities (USA) LLC and its affiliates, alleging that the company made ‘fraudulent misrepresentations and omissions to promote the sale of residential mortgage-backed securities (RMBS) to investors.’
The lawsuit is part of an enforcement action by the RMBS Working Group, a state-federal task force created by President Obama earlier this year. Schneiderman is co-chairman of the task force.
The lawsuit claims that Credit Suisse deceived investors about the level of quality control surrounding mortgages that were packaged into RMBS prior to 2008. Schneiderman says that RMBS sponsored and underwritten by Credit Suisse in 2006 and 2007 have suffered losses of approximately $11.2 billion.
‘This lawsuit against Credit Suisse 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,’ says Schneiderman. ‘Our investigations and legal actions demonstrate that there must be one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. We need real accountability for the illegal and deceptive conduct in the creation of the housing bubble in order to bring justice for New York's homeowners and investors.’
Schneiderman is seeking investor damages to recoup the RMBS losses, as well as ‘other equitable relief.’
In response to the lawsuit, Credit Suisse challenged Schneiderman's assertions and defended its business practices.
‘We firmly reject this complaint, which recycles baseless claims from private lawsuits and uses an inaccurate and exaggerated number,’ Credit Suisse spokesperson Victoria Harmon says.