Court rejects Credit Suisse’s request to dismiss Schneiderman lawsuit

New York rejected Credit Suisse Group AG’s request to dismiss a lawsuit demanding $10 billion in damages, accusing the firm of bank fraud in the sale of mortgage-backed securities before the recession.

In 2012 Attorney General Eric Schneiderman sued Credit Suisse for failing to properly represent the risks of investing in mortgage-backed securities. In 2013 the bank said that the court hearing in Manhattan missed a three-year deadline for suing.

However, New York said that it had six years to file a complaint on the issue.

Judge Marcy Friedman said in Thursday’s decision that Schneiderman’s suit was valid, with concrete claims that the bank engaged in misconduct.

Drew Benson, a spokesman for Zurich-based Credit Suisse, said in an email Friday:

“We will appeal this particular decision and continue to defend ourselves in this case,”

Elizabeth DeBold, a spokeswoman for Schneiderman, said in an email:

“We look forward to continuing our case against Credit Suisse and pursuing accountability for those who contributed to the near collapse of our economy,”

The ruling sends shivers through the financial industry

This ruling is going to give Schneiderman more strength in punishing other banks over irresponsible practices that led to the financial crisis.

Last year JPMorgan Chase & Co. was also sued by Schneiderman’s office. The company agreed to settle the case for $13 billion.

In July, Citigroup Inc. paid $7 billion in fines and consumer relief. A month later Bank of America Corp. said it would pay $17 billion to settle civil investigations by federal and state prosecutors, including Schneiderman.