Credit Suisse braces for US lawsuit for misleading investors

The New York attorney-general is in the process of preparing a civil lawsuit against Credit Suisse for misleading investors who lost billions of dollars on mortgage-backed securities, during the US sub prime mortagage financial crisis.

The lawsuit, expected to be filed tomorrow, alleges that Credit Suisse misrepresented the quality of loans packaged in securities, according to the source.
Investors lost more than $11.2 billion.

According to the report, James Freedland, a spokesman for the attorney-general Eric Schneiderman had filed a similar lawsuit against JPMorgan Chase & Co over mortgage-backed securities packaged and sold by Bear Stearns, the investment bank JPMorgan bought for $10 a share in March 2008.

The lawsuit claimed that loss to investors totaled over $22.5 billion on over 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 came as the first action from the working group that president Barack Obama set up to go after wrongdoing that led to the financial crisis.

Credit Suisse was down as much as 3.4 per cent, and was down 2.4 per cent to 21.05 francs in morning Swiss trading. The stock had declined 4.6 per cent this year, as against a 29 per cent gain in UBS.