New York Attorney General Sues Credit Suisse For Residential Mortgage-Backed Securities Fraud
On November 20, 2012, the New York Attorney General, Eric Schneiderman, along with the Residential Mortgage-Backed Securities (RMBS) Working Group filed a Martin Act complaint against Credit Suisse Securities LLC. The complaint accuses Credit Suisse of deceiving investors about the quality of the mortgage loans which were part of the RMBS the company was selling.
Fraud and a general lack of oversight in the RMBS industry was a huge factor in the recent financial market crash. RMBS are pools of mortgages deposited into trusts and then sold as securities to investors. According to the allegations, Credit Suisse told its investors that it carefully evaluated the mortgages-backed securities and that it regularly monitored them to ensure their quality, but it allegedly did neither. The complaint further accuses Credit Suisse of not evaluating the loans, and actively ignoring any defects that it happened to uncover. Additionally, Credit Suisse was accused of loaning to borrowers who were incredibly likely to default on their loans. When people defaulted on their loans, Credit Suisse’s investors lost at least $11.2 billion.
This case against Credit Suisse is one of many that have been filed and pursued against large financial institutions related to fraud in connection with the sale of RMBS in the wake of the recent financial crisis. The attorneys at Tycko & Zavareei encourage the RMBS Working Group to continue to investigate and prosecute these types of cases and to bring to justice the individuals and institutions whose misconduct contributed to bringing the Nation’s financial system to its knees.
Please keep checking our website for more updates on the progression of this case and to learn more about fraud in connection with RMBS, as well as other types of fraud involving our financial institutions, and what you can do to help fight it.