New Jersey sues Credit Suisse
The US state of New Jersey has accused Credit Suisse Securities of misrepresenting the risks on more than $10 billion (CHF8.9 billion) in securities backed by home loans.
In a lawsuit filed on Wednesday, the state said Credit Suisse did not disclose to investors that underwriting guidelines had been abandoned in the sales.
The suit says that in addition, investors were not told that many of the loan originators had poor track records and that some had even been suspended from doing business with Credit Suisse.
Credit Suisse’s traders were not willing to hold the securities on the bank’s books, yet the bank was selling them to investors, according to the lawsuit. Allegedly, the bank was also reimbursed tens of millions of dollars by loan originators for defective loans, but didn’t pass those funds along to the trusts that owned them.
“The kind of conduct described in this lawsuit is the kind of conduct that helped put the nation in financial crisis,” John Hoffman, the acting attorney general in New Jersey, said in a statement. New York State filed a similar suit last year. Credit Suisse in currently fighting that lawsuit.
Credit Suisse says the New Jersey complaint is without merit and uses inaccurate and exaggerated figures. Based in New York, Credit Suisse Securities is a subsidiary of Zurich-based Credit Suisse and operates as an investment bank in the United States.
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