| NEW YORK, March 1
NEW YORK, March 1 Credit Suisse Group AG
settled a lawsuit brought by bond insurer Ambac
Financial Group Inc over misrepresentations on
mortgage-backed securities that Ambac insured in 2007, according
to court documents and a source familiar with the matter.
The terms of the settlement were not made public.
Ambac's lawsuit claimed Credit Suiss Securities, along with
its affiliate DLJ Mortgage Capital, misled the insurer about a
pool of over 2,000 home equity lines of credit with a principal
balance of about $170 million. Ambac said the defendants did not
disclose that many borrowers had little or no ability to repay.
When Ambac filed its lawsuit in 2010, Ambac said it already
had made claim payments of over $44 million and expected to pay
tens of millions more.
A stipulation discontinuing the action was filed in New York
state court on Friday. The source familiar with the matter said
the filing meant the parties had settled.
John Ansbro, a lawyer for Zurich-based Credit Suisse,
Switzerland's second-largest bank, declined comment. An Ambac
representative did not immediately return a call for
Ambac filed for Chapter 11 in 2010 and had a restructuring
plan approved by a bankruptcy judge last March. The company and
other bond insurers have sued banks who packaged and sold
mortgage securities after struggling with large losses.
The lawsuit is similar to those filed by other bond
guarantors including MBIA Inc and Assured Guaranty Ltd
against such banks as JPMorgan Chase and Co and
Bank of America Corp.
Credit Suisse recently has become a target of government
probes over mortgage-backed securities. The bank is under
investigation by the U.S. Attorney's office in New Jersey over
mortgage-backed securities packaged and sold by the bank, as
Reuters reported last week.
New York Attorney General Eric Schneiderman filed a case
against Credit Suisse in November, accusing the bank of
misleading investors who lost billions in mortgage-backed
securities sold by the bank.
The same month, the bank agreed to a $120 million settlement
with the U.S. Securities and Exchange Commission over the sale
of risky mortgage bonds.
The case is Ambac Assurance Corp v DLJ Mortgage Capital,
600070/2010, New York State Supreme Court, New York County.