Bad mortgage deals bite another big bank

by Ryan Smith11 Sep 2013

Yet another major bank is being sued over the offering of mortgage-backed securities during the lead-up to the financial meltdown, according to a Bloomberg report.

Credit Suisse Group AG, a Zurich-based bank, is being sued by the investment fund Phoenix Light SF Ltd., according to Bloomberg. The lawsuit claims that Credit Suisse misrepresented or omitted information about the quality of mortgages backing $362 million in securities offered between 2005 and 2007. Phoenix -- which took over the securities from five other investors that collapsed -- also claims that Credit Suisse failed to disclose that it was betting that the securities would default, according to Bloomberg.

According to the complaint, the securities in question “are now all rated as 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 is also suing JP Morgan Chase and Goldman Sachs over what it calls the lenders’ misrepresentations about loans backing securities.

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