Credit Suisse Is Sued Over Mortgage Securities Losses
Credit Suisse Group AG (CSGN) was sued by the investment fund Phoenix Light SF Ltd. over alleged misrepresentations in the offering of $362 million worth of mortgage-backed securities.
Phoenix, based in Dublin, which took over claims to the securities from five other investors that have since collapsed or nearly collapsed, filed a complaint against Credit Suisse today in state court in Manhattan.
The Zurich-based bank made misrepresentations and omissions about the credit quality of the loans underlying the securities in offerings from 2005 to 2007, Phoenix alleged in the complaint. Offering documents also failed to disclose that Credit Suisse was privately betting that the securities would default, Phoenix alleged.
The certificates “are now all rated at junk status or below and are essentially worthless investments, while defendants, on the other hand, have profited handsomely from their roles in structuring, marketing and selling the certificates,” Phoenix said in the complaint.
A Credit Suisse spokesman, Drew Benson, declined to comment on the lawsuit.
JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), both based in New York, have also been sued by Phoenix Light over alleged misrepresentations about loans backing securities. The case is pending in Manhattan state court.
The case is Phoenix Light SF Ltd. v. Credit Suisse AG, 653123/2013, New York State Supreme Court, New York County (Manhattan).
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