Credit Suisse vows to fight US mortgage securities case

Credit Suisse said it would fight a US lawsuit which accuses the Swiss bank of deceiving investors in mortgage-backed securities it had issued.

The Zurich-based bank said a New York State Supreme Court justice had last week rejected its 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," a spokeswoman for Credit Suisse in Zurich said.

The US 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 US 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.

US-based rivals including Bank of America Corp, JPMorgan Chase & Co and Citigroup Inc have in recent months reached settlements with the U. 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.

Reuters