Credit Suisse says NY mortgage case too little, too late
Credit Suisse Group AG asked a court to dismiss a lawsuit by New York Attorney General Eric Schneiderman that accuses the Swiss bank of deceiving investors in mortgage-backed securities that resulted in $11.2 billion of losses.
In a Monday filing in the New York State Supreme Court in Manhattan, Credit Suisse said the attorney general waited too long, was precluded by federal law, and was not specific enough in detailing the alleged wrongdoing to allow the case to go forward.
Schneiderman sued in November, accusing Credit Suisse of misrepresenting the quality of loans underlying securities it sponsored and underwrote in 2006 and 2007.
But Credit Suisse said the lawsuit substantially mimicked other lawsuits filed as much as five years ago, and used "hindsight" to buttress stale claims that could ultimately only benefit sophisticated investors, who should have known the securities were risky to begin with.
"It is striking how threadbare the allegations are even with all of the extra time the NYAG took to file it," the bank's lawyers wrote.
Damien Lavera, a Schneiderman spokesman, said the attorney general is confident he will prevail, and hold accountable "those responsible for the misconduct that led to the crash of the housing market and the collapse of the American economy."
Schneiderman is co-chair of a state-federal task force including the U.S. Securities and Exchange Commission, that is investigating misconduct in the packaging and sale of mortgage-backed securities that helped lead to the financial crisis.
The SEC in November reached a $120 million settlement with Credit Suisse, and the bank said Schneiderman's lawsuit rehashed some claims addressed in that accord.
Credit Suisse also said the lawsuit was barred by a three-year statute of limitations and by the National Securities Markets Improvement Act of 1996, which preempts state securities laws.
Schneiderman has argued that a six-year statute applies.
In October, Schneiderman sued JPMorgan Chase & Co over mortgage-backed securities created by Bear Stearns Cos, the investment bank it acquired in 2008.
The JPMorgan case was the first lawsuit to come out of the task force. JPMorgan is trying to dismiss that case, raising some of the same arguments as Credit Suisse.
The case is People of the State of New York v Credit Suisse AG, New York State Supreme Court, New York County No. 451802-2012.
(Reporting by Karen Freifeld; Editing by Leslie Gevirtz)