New York prepares lawsuit against Credit Suisse-source

PHOTO: New York prepares lawsuit against Credit Suisse-source

NEW YORK - The New York attorney-general is preparing to file a civil lawsuit against Credit Suisse for misleading investors who lost billions of dollars on mortgage-backed securities, according to a source familiar with the matter.

The lawsuit, which is expected to be filed on Wednesday, will allege that Credit Suisse misrepresented the quality of loans packaged in securities, according to the source.

Investors lost more than US$11.2 billion (S$13.7 billion), the source added.

Credit Suisse did not immediately respond to a request for comment after business hours.

James Freedland, a spokesman for the Attorney-General Eric Schneiderman, declined to comment.

Last month, Schneiderman filed a similar lawsuit against JPMorgan Chase & Co over mortgage-backed securities packaged and sold by Bear Stearns, the investment bank JPMorgan bought for US$10 a share in March 2008. That lawsuit claimed that investors lost more than US$22.5 billion on more than 100 securities.

Schneiderman's lawsuit was brought under the Martin Act, New York's powerful securities fraud statute, which does not require proof of intent to deceive.

It was the first action to come out of the working group created by President Barack Obama to go after wrongdoing that led to the financial crisis. Schneiderman is a co-chair of that task force.