Credit Suisse sold securities that were backed by low-quality loans and turned out to be far riskier than promised, ABP said in a complaint filed December 29, according to Bloomberg. The pension fund said Zurich-based Credit Suisse knew of the wholesale and systematic abandonment of underwriting guidelines by loan originators, leading to high default and delinquency rates by borrowers.
According to the complaint, ABP has suffered substantial losses on the securities, and it is increasingly probable that it will not obtain the full payments it expects.
Bloomberg said a lawyer for ABP couldn’t be reached for comment about the amount of securities at issue in the lawsuit, and Steven Vames, a spokesman for Credit Suisse, declined to immediately comment.
The case is Stichting Pensioenfonds ABP v. Credit Suisse Group AG (CS), 653665-2011, New York State Supreme Court (Manhattan).Earlier in December, Stichting Pensioenfonds ABP filed suit against J.P. Morgan Chase and other defendants for the same issue. That lawsuit is here.
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