Credit Suisse Group AG was sued by New York Attorney General Eric Schneiderman for allegedly deceiving investors in mortgage-backed securities.
Credit Suisse, which last week agreed to settle U.S. claims that it misled mortgage bond investors, was accused of failing to adequately evaluate loans and ignoring defects it uncovered, Schneiderman said today in a statement.
"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," Schneiderman said.
Investors have incurred losses of about $11 billion in mortgage securities sponsored and underwritten by Zurich-based Credit Suisse in 2006 and 2007, according to the statement.
Schneiderman in October sued JPMorgan Chase & Co. alleging that Bear Stearns, the investment bank JPMorgan acquired in 2008, defrauded investors. Bear Stearns engaged in "systemic fraud" by failing to evaluate loans backing securities and ignoring defects, the state said.
Schneiderman is co-chairman of a state-federal group that is investigating fraud in the bundling of mortgage loans into securities. The group includes officials from the U.S. Justice Department and the Securities and Exchange Commission.
After the JPMorgan case was filed, Schneiderman said the lawsuit would serve as a template for cases against other banks.
The SEC said Nov. 16 that JPMorgan and Credit Suisse agreed to pay more than $400 million to settle regulatory claims they misled investors.
JPMorgan resolved claims that it made misstatements about delinquency data for loans packaged into securities and that Bear Stearns didn't tell mortgage investors it kept reimbursements on soured loans, the SEC said in a statement. Credit Suisse was also faulted for disclosures on reimbursements.
