TRENTON, N.J. (Legal Newsline) -- New Jersey Acting Attorney General John Hoffman announced Wednesday his office is filing a lawsuit against Credit Suisse Securities (USA) LLC and two company affiliates for allegedly misrepresenting the risks involved in residential mortgage backed securities trusts.
Credit Suisse allegedly offered more than $10 billion in the securities for sale without disclosing to investors that there was a wholesale abandonment of underwriting guidelines meant to ensure the mortgage loans underlying the trusts were made in accordance with appropriate lending guidelines.
Credit Suisse also allegedly failed to disclose that numerous loan originators had poor track records of delinquencies and defaults, among other disclosure failures.
The lawsuit named Credit Suisse, Credit Suisse First Boston Mortgage Securities Corp. and DLJ Mortgage Capital Inc. as defendants.
"The kind of conduct described in this lawsuit is the kind of conduct that helped put the nation in financial crisis, with loan originators and investment banking firms abandoning prudent lending guidelines in order to generate quick profits," Hoffman said.
"Ultimately, it was consumers who suffered the harm caused by these reckless lending practices, and by the misrepresentations used to make these doomed investments seem attractive. This kind of conduct cannot, and will not, be tolerated."
Hoffman said the alleged conduct by Credit Suisse is particularly egregious because investors in the securities sold included educational institutions, charities, and public and private pension funds.