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Credit Suisse Sued by IKB Over Mortgage-Backed Securities

Nov. 10 (Bloomberg) -- Credit Suisse Group AG, Switzerland’s second-biggest bank, was sued by IKB Deutsche Industriebank AG over $215.4 million in residential mortgage-backed securities.

IKB accused Credit Suisse of “misrepresentations concerning the sale of, and role in the creation and sale” of the securities, purchased by IKB and Rio Debt Holdings (Ireland) Ltd., according to documents filed today in New York State Supreme Court in Manhattan.

The suit seeks rescission of the sale and purchase of the notes, which were arranged, collateralized, underwritten and sold by Credit Suisse, IKB said in the court documents. IKB seeks restitution and damages of at least $215.4 million.

“These allegations are meritless and we will vigorously defend against them,” Credit Suisse said in a statement. “IKB was well informed on the risks associated with these investments. Credit Suisse cannot be held accountable for IKB’s losses on these securities nor for the decline in the U.S. housing market.”

IKB, which was bailed out during the subprime-mortgage crisis, was put up for sale by buyout firm Lone Star Funds. Dallas-based Lone Star paid about 137 million euros ($185 million) to take control of IKB in August 2008.

IKB, based in Dusseldorf, Germany, sued Zurich-based Credit Suisse in the same New York court last month in connection with more than $16 million worth of the securities. It also sued Citigroup Inc. and JPMorgan Chase & Co. in September over residential mortgage-backed securities.

The case is IKB Deutsche Industriebank AG v. Credit Suisse Securities (USA) LLC, 653122/2011, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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