[ by Melanie Gretchen ]

New York has sued Credit Suisse over residential mortgage-backed securities the bank sponsored and underwrote in 2006 and 2007, leading to $11.2 billion in losses to investors.  In the civil lawsuit, New York Attorney General Eric Schneiderman accused Switzerland's 2nd-largest bank of misrepresenting the quality of loans, under a New York securities fraud statute known as the Martin Act, which does not require proof of intent to deceive.

Findings and Allegations. Mr. Schneiderman acted on behalf of a working group created by President Barack Obama to go after wrongdoing that led to the 2008 financial crisis.  He is the co-chair.  According to the suit, the Zurich-based bank:

• failed to adequately evaluate the loans
• ignored defects its limited review did uncover
• failed to perform due diligence it promised

Although Credit Suisse declined to comment, the bank announced a management shake-up on Tuesday.  Just last week, on Friday, the bank agreed to pay $120 million to settle U.S. civil charges that it misled investors in the sale of risky mortgage bonds prior to the financial crisis.  Credit Suisse did not admit wrongdoing.

The lawsuit "marks another significant step in our efforts to hold financial institutions accountable for the misconduct that led to the worst financial crisis in nearly a century." -- Mr. Schneiderman, in a statement.

The case: People of the State of New York v. Credit Suisse Securities, 451802/2012, New York state Supreme Court, New York County.

For further details, go to [Reuters, 11/20/12] and [Reuters, 11/20/12].