By Erin Geiger Smith
Oct 4 The U.S. credit union regulator filed a lawsuit on Thursday against Credit Suisse Securities (USA) , alleging misrepresentations in the underwriting and sale of mortgage-backed securities.
The National Credit Union Administration said in a statement that three failed credit unions paid more than $715 million for the securities at issue in the lawsuit, which filed in U.S. district court in Kansas.
"Credit Suisse is one of several firms that sold faulty securities to corporate credit unions, which led to their collapse," the agency said.
The suit alleges that Credit Suisse underwrote and sold securities that were "significantly riskier than represented" in related prospectuses and registration statements.
The agency has been trying to recover losses related to the failure of five institutions that were seized by NCUA in 2009 and 2010 after they ran into trouble due to the crumbling housing market.
The failed credit unions that purchased the securities are the U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, and Southwest Corporate Federal Credit Union.
Corporate, or wholesale, credit unions provide services to retail credit unions including lending, as well as check and payment clearance services.
Credit Suisse declined to comment.
The NCUA previously filed lawsuits against other financial institutions including JP Morgan Chase & Co's JPMorgan Securities, Royal Bank of Scotland Group Plc's RBS Securities, and Goldman Sachs.
In November 2011, the NCUA negotiated settlements totaling just over $165 million with Citigroup and Deutsche Bank Securities.
The lawsuit is National Credit Union Administration Board v. Credit Suisse Securities (USA), et al, U.S. District Court for the District of Kansas, No. 12-02648.