Credit Suisse to fight New York mortgage securities case

Mon Dec 29, 2014 12:49pm EST
 
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ZURICH (Reuters) - Credit Suisse Group AG CSGN.VX has signaled that it intends to fight a U.S. lawsuit that accuses the Swiss bank of deceiving investors in mortgage-backed securities it had issued.

A New York State Supreme Court justice last week rejected the Zurich-based bank's request to dismiss the case, in which New York Attorney General Eric Schneiderman accuses the bank of misrepresenting the quality of loans underlying residential mortgage-backed securities sponsored and underwritten by Credit Suisse in 2006 and 2007.

Investors suffered $11.2 billion in losses on the securities, according to Schneiderman's lawsuit, which stems from a joint federal-state working group created by President Barack Obama to go after wrongdoing that led to the 2008 financial crisis.

"We will appeal this particular decision and continue to defend ourselves in this case," Credit Suisse said in a statement on Thursday after the rejection of its request for the case to be dismissed.

The U.S. government's examination of financial crisis-era mortgage abuses is now Credit Suisse's biggest legal worry, after it in May set aside a years-long U.S. probe into its dealings with Americans evading taxes by pleading guilty to a criminal charge and agreeing to pay more than $2.5 billion in penalties.

U.S.-based rivals including Bank of America Corp (BAC.N: Quote), JPMorgan Chase & Co (JPM.N: Quote) and Citigroup Inc (C.N: Quote) have in recent months reached settlements with the U.S. government over charges they misled investors into buying troubled mortgage-backed securities.

In October Credit Suisse said it added a net 390 million Swiss francs ($395 million) to its litigation provisions in the third quarter, without saying what the provision was for.

(This version of the story corrects timing of Credit Suisse statement)

(Reporting by Katharina Bart; Editing by David Holmes and David Goodman)

 
The logo of Swiss bank Credit Suisse is seen below the Swiss national flag at a building in the Federal Square in Bern May 15, 2014.   REUTERS/Ruben Sprich