NYAG Eric Schneiderman's New Wall Street Fraud Target: Credit Suisse

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At the beginning of October, we reported on the Residential Mortgage-Backed Securities' Group's first target, J.P. Morgan Chase. Started by President Obama and led by New York Attorney General Eric Schneiderman, the task force seeks to reprimand the culprits behind 2008's financial implosion. Aside from the enormous SEC settlement with Goldman Sachs, it's the most comprehensive action taken towards getting to the bottom of Wall Street's actions leading up to what we now know as The Great Bubble. 

J.P. Morgan Chase was in trouble for its acquisition of Bear Stearns, the now-defunct bank that reportedly "kept investors in the dark" about just what was going on when, for lack of a better phrase, shit hit the fan. Also, to add to that mess, the accusation from Schneiderman's office deemed the mortgage-backed securities Bear Stearns was dealing out like one big poker deck were, in all natures of the word, "risky."

And, as of yesterday, the Wall Street cops have a new target: good ol' Credit Suisse.


In a press release sent to the Voice, the NYAG laid out his reasons for why Credit Suisse was being slapped on the wrist for fraud:

According to Attorney General Schneiderman's lawsuit, Credit Suisse deceived investors as to the care with which they evaluated the quality of mortgage loans packaged into residential mortgage-backed securities prior to 2008. RMBS sponsored and underwritten by Credit Suisse in 2006 and 2007 have suffered losses of approximately $11.2 billion.

Similar to the J.P. Morgan case, the accusation is based off New York State's Martin Act, which states that the government can sue a financial institution for deceiving a customer without proof. Also, the Act gives a five-year window to state officials to bring the accused to court over said charges. As you can see, Schneiderman has a ton of enforcement power on his hands and he's not afraid to use it (also, you can throw private equity companies onto that list, too).


According to Reuters,the bank has not made any immediate comment about the pending charges. However, the announcement came soon after the bank conducted reshuffling of its management ranks.

Like with the first case, it's unseen as to what the lawsuit will bring in terms of fines or, even worse, jail time. White collar crime is wildly unpredictable; Schneiderman is moving into uncharted legal territory with these 'too big to fail' financial titans. Regardless, at least we have something to work with.

You can read the full statement from Schneiderman's office here.

[jsurico15@gmail.com/@JSuricz]


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wfufidio
wfufidio

"... New York State's Martin Act, which states that the government can sue a financial institution for deceiving a customer without proof."  I've got no love lost for Wall Street hucksters or the free-marketeers in D.C. that enabled them, but prosecution without proof sounds sinister.  Any firm can be guilty until proven innocent?  Watch out New York, push too hard and the Exchange will be in Hoboken.

NY_yupster
NY_yupster

not much of a butt kisser are you? 

 

poverty sucks.

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