""New York Attorney General Eric Schneiderman"":http://www.ag.ny.gov/ announced a complaint was filed Tuesday against ""Credit Suisse Securities (USA) LLC"":https://www.credit-suisse.com/us/en/ and its affiliates for allegedly misrepresenting residential mortgage-backed securities (RMBS) sold to investors.[IMAGE]
The complaint is the result of investigations carried out by the RMBS Working Group, a federal task force created by President Obama in early 2012. The lawsuit marks the second complaint from the group.
The suit alleges that from 2006 to 2007, Credit Suisse led investors to believe the bank carefully evaluated the loans [COLUMN_BREAK]
underlying the RMBS and encouraged originators to implement ""sound"" practices.
Instead, Zurich-based Credit Suisse ""systematically failed to adequately evaluate these loans, and kept investors in the dark about the inadequacy of their review procedures,"" the complaint states.
Thus, loans in the bank's RMBS included loans made to borrowers who were likely to go into default.
The group alleges that from 2006 to 2007, Credit Suisse issued $93.8 billion in RMBS. As of August, losses from those securities reached over $11.2 billion, or about 12 percent of the total.
The New York AG's complaint seeks to recover investor losses and ""other equitable relief.""
In October, the RMBS Working Group brought on its ""first suit"":http://www.dsnews.com/articles/rmbs-working-group-sues-jpmorgan-for-securities-fraud-2012-10-02 against JPMorgan Chase.
During a conference call, Schneiderman, who serves as co-chair of the group, revealed there are other institutions being ""scrutinized,"" and says the working group still has a long way to go.
While other financial companies are being investigated, as of now, Schneiderman says there have been no claims brought out against individuals.