This article was published on November 20, 2012 by the LA Times:
Written by: Alejandro Lazo
Article source: www.LAtimes.com
New York Atty Gen. Eric T. Schneiderman sued Credit Suisse on Tuesday, accusing the Swiss Bank of systematically misleading investors who bought the firm’s mortgage-backed securities during the housing boom.
The lawsuit was brought in New York State Supreme Court on Tuesday
under the state’s powerful Martin Act. The case is the latest to stem
from a working group of state and federal regulators created earlier
this year by President Obama investigating the role that large financial institutions played in creating the financial crisis.
In October, Schneiderman sued JPMorgan Chase
& Co. contending the bank should be held liable for widespread
fraud related to the packaging and sale of securities backed by
residential mortgages.
Also last month, the U.S.
attorney's office in Manhattan accused Wells Fargo of defrauding a
government-backed mortgage insurance program of hundreds of millions of
dollars over more than a decade by improperly underwriting more than
100,000 home loans.
In a conference call with reporters on Tuesday, Schneiderman said the working group investigations are far from over.
“The working group just got going this spring, and I think that we
have a long way to go,” he said. “We are a long way from wrapping this
up.”
The case against Credit Suisse is a "platform" case, involving the
systematic behavior of the institution over time, Schneiderman said.
The task force has not mounted criminal cases or taken action against
individual investors. Schneiderman said those cases could come.
“Certainly nothing has been foreclosed by all the actions we have
taken,” he said. “There still is an opening for complaints against
individuals, and we will see where the evidence leads us.”
In his case against Credit Suisse, Schneiderman alleged that a U.S.
arm of the company, Credit Suisse Securities, and its affiliates, made
fraudulent omissions to investors in order to sell residential
mortgage-backed securities during the boom. The losses from these
securities sponsored and underwritten by Credit Suisse have suffered
losses of $11.2 billion, the attorney general’s complaint alleges.
Credit Suisse allegedly misled investors into thinking the loans it
was packaging and selling had been evaluated carefully and would be kept
under systematic review, according to the complaint. The attorney
general in his lawsuit accused the bank of failing to live up to these
representations to investors.