NEW YORK, June 12 (Reuters) - New York State’s highest court on Tuesday narrowed the reach of a powerful law used by the state’s attorney general to fight financial fraud, handing a partial victory to Credit Suisse Group AG in an $11 billion lawsuit over defective mortgage securities.
Reversing a lower court ruling, the Court of Appeals said in a 4-1 vote that claims brought under the Martin Act are governed by a three-year statute of limitations, not six years as the attorney general maintained.
But the appeals court also said Credit Suisse’s alleged misconduct might be subject to a six-year statute of limitations under so-called common law, and said the trial judge should decide whether it does.
In a complaint filed in November 2012, then-Attorney General Eric Schneiderman accused Credit Suisse of misrepresenting the quality of loans underlying residential mortgage-backed securities it sold in 2006 and 2007. He said this resulted in heavy investor losses when the global financial crisis struck.
Reporting by Jonathan Stempel in New York Editing by Marguerita Choy