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Credit Suisse to Pay $10B in New York Mortgage Lawsuit
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Swiss banking giant Credit Suisse Group AG is likely to face a fine of $10 billion, on account of allegations from the New York Attorney General, Eric Schneiderman, accusing the bank of fraudulent residential mortgage-backed securities (RMBS) sale in the run-up to the 2008 financial crisis. The case was filed by Schneiderman in 2012, which the company tried to dismiss by calling it outside the statute of limitations, however, was unsuccessful.
The court rejected the company’s appeal to dismiss the case, stating that Schneiderman had provided proofs to the panel, consisting of five judges, which showed Credit Suisse may have involved in mortgage misconduct. Further, the court mentioned that the claims made by Schneiderman were within the six-year statute of limitations.
However, two of the judges disapproved the court’s ruling, saying that a three-year statute of limitations was applicable for the case and should have been ruled out. Credit Suisse’s spokesman – Andrew Wilson – declined to comment on the matter.
Background
In Dec 2014, Credit Suisse made its first appeal to the New York Supreme Court Justice – Marcy Friedman – who denied the bank’s request to dismiss the lawsuit.
In Sep 2016, news surfaced that Credit Suisse was in talks with the U.S. Department of Justice (DoJ) to settle investigations into its mortgage-backed securities. At the same time, Barclays PLC (BCS - Free Report) too was making efforts to dismiss a similar case with DoJ.
Among other major banks, UBS Group AG (UBS - Free Report) and HSBC Holdings Plc (HSBC - Free Report) have also disclosed the U.S. investigations into their mortgage-securities businesses.
Credit Suisse is also fighting similar lawsuits with the New Jersey attorney generals, who have accused it of misleading investors. Also, in addition to the mortgage-securities claims, Credit Suisse is facing allegations of rigging financial benchmarks and criminal complaints by its clients in Switzerland. The imposition of hefty fines resulting from ongoing lawsuits is likely to weigh on the company’s profitability.
Credit Suisse’s stock currently carries a Zacks Rank #4 (Sell). The company’s stock has declined nearly 29% so far this year, underperforming the 7.4% growth for the Zacks categorized Foreign Banks industry.
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Credit Suisse to Pay $10B in New York Mortgage Lawsuit
Swiss banking giant Credit Suisse Group AG is likely to face a fine of $10 billion, on account of allegations from the New York Attorney General, Eric Schneiderman, accusing the bank of fraudulent residential mortgage-backed securities (RMBS) sale in the run-up to the 2008 financial crisis. The case was filed by Schneiderman in 2012, which the company tried to dismiss by calling it outside the statute of limitations, however, was unsuccessful.
The court rejected the company’s appeal to dismiss the case, stating that Schneiderman had provided proofs to the panel, consisting of five judges, which showed Credit Suisse may have involved in mortgage misconduct. Further, the court mentioned that the claims made by Schneiderman were within the six-year statute of limitations.
However, two of the judges disapproved the court’s ruling, saying that a three-year statute of limitations was applicable for the case and should have been ruled out. Credit Suisse’s spokesman – Andrew Wilson – declined to comment on the matter.
Background
In Dec 2014, Credit Suisse made its first appeal to the New York Supreme Court Justice – Marcy Friedman – who denied the bank’s request to dismiss the lawsuit.
In Sep 2016, news surfaced that Credit Suisse was in talks with the U.S. Department of Justice (DoJ) to settle investigations into its mortgage-backed securities. At the same time, Barclays PLC (BCS - Free Report) too was making efforts to dismiss a similar case with DoJ.
Among other major banks, UBS Group AG (UBS - Free Report) and HSBC Holdings Plc (HSBC - Free Report) have also disclosed the U.S. investigations into their mortgage-securities businesses.
Credit Suisse is also fighting similar lawsuits with the New Jersey attorney generals, who have accused it of misleading investors. Also, in addition to the mortgage-securities claims, Credit Suisse is facing allegations of rigging financial benchmarks and criminal complaints by its clients in Switzerland. The imposition of hefty fines resulting from ongoing lawsuits is likely to weigh on the company’s profitability.
Credit Suisse’s stock currently carries a Zacks Rank #4 (Sell). The company’s stock has declined nearly 29% so far this year, underperforming the 7.4% growth for the Zacks categorized Foreign Banks industry.
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>