Credit Suisse (CS) is planning to fight a $10 billion lawsuit brought against the bank by the State of New York, alleging the bank of misleading investors in the mortgage-backed securities it issued in the run-up to the financial crisis.
According to a report from Reuters, New York Attorney General Eric Schneiderman said that investors lost $11.2 billion by investing in Credit Suisse mortgage bonds backed by toxic mortgages.
From the Reuters report:
A New York State Supreme Court justice last week rejected the Zurich-based bank's request to dismiss the case, in which New York Attorney General Eric Schneiderman accuses the bank of misrepresenting the quality of loans underlying residential mortgage-backed securities sponsored and underwritten by Credit Suisse in 2006 and 2007.
"We will appeal this particular decision and continue to defend ourselves in this case," Credit Suisse said in a statement to Reuters.
A recent report from Bloomberg sheds a little more light on the lawsuit. According to Bloomberg, Credit Suisse argued that New York's lawsuit, filed in 2012, exceeded the statute of limitations to file the lawsuit. Credit Suisse said that New York only had three years to file the suit, while New York claimed that it was allowed six years to file the suit.
The judge ruled in New York's favor and now the lawsuit will proceed.
In March, Credit Suisse reached an agreement with the Federal Housing Finance Agency to pay $885 million to resolve claims related to mortgage-backed securities.
Under the agreement, Credit Suisse was ordered $234 million to Fannie Mae and $651 million to Freddie Mac.
According to the Reuters report, Credit Suisse added $395 million to its litgation provisions in the third quarter, but did not say what the money was going to be used for.