Charles Schwab Corp. is suing units of three banks over the sale of mortgage-backed securities to the brokerage company's bank, alleging that the units made false statements or omitted facts about the credit quality of loans backing the investments.
The banks named in the complaint, which was filed June 29, include units of Bank of America Corp., UBS AG, and JPMorgan Chase & Co. Two units of Wells Fargo & Co. were also named in documents, though the company was not one of the dealers that sold securities to Schwab. Rather, Wells Fargo is considered an issuer of the certificate that UBS sold to Schwab.
In a filing in a San Francisco state court, Schwab said it bought three certificates in three securitization trusts backed by residential mortgage loans for $130 million.
Schwab alleged that the defendants "made untrue statements, or omitted important information, about such material facts as the loan-to-value ratios of the mortgage loans, the number of borrowers who did not live in the houses that secured the loans and the extent to which the entities that made the loans departed from their standards in doing so."
The complaint said that, because the certificates are securities under two California securities laws, Schwab believes it is entitled to rescind its purchases or be paid damages for its losses.
Bill Halldin, a spokesman for Bank of America, said, "The securities are performing well, are not in default."