After allegedly selling toxic residential mortgage-backed securities which led to the failure of three credit unions, Credit Suisse Securities has agreed to pay $400 million in a settlement on Wednesday, Law360 reports.
The National Credit Union Administration (NCUA) settled with Credit Suisse, one of Switzerland’s largest banks, ending a litigation that has lasted nearly five years. The NCUA filed a motion for voluntary dismissal in Kansas federal court on Tuesday.
"We are pleased that with the finalization of this settlement, another legacy matter has been resolved," Nicole Sharp, a spokeswoman for Credit Suisse, said in a statement.
The NCUA alleged in its complaint that Credit Suisse made false statements about the quality of mortgages underlying around 20 securities it sold to Lenaxa, Kansas-based U.S. Central Federal Credit Union; San Dimas, California-based Southwest Corporate Federal Credit Union; and Plano, Texas-based Western Corporate Federal Credit Union prior to the financial crisis, says Law360.
Credit Suisse had previously seen these claims trimmed in original litigation, and the bank fought to dismiss the case entirely. In 2013, U.S. District Judge John Lungstrum rejected federal claims related to 12 residential mortgage-backed securities sold by Suisse Bank, and purchased by U.S. Central Federal Credit Union, Western Corporate Federal Credit Union and Southwest Federal Credit Union. Judge Lungstrum preserved the federal claims of eight other banks.
The bank had previously reached a settlement of $50 million with the NCUA following the failure of several other credit unions in April 2016.
Law360 noted the NCUA has seen around $5.1 billion in settlement from several banks over the sales of mortgage backed securities to five failed federal credit unions.
"NCUA has pursued litigation for nearly six years with the aim of holding responsible parties accountable and reducing the burden of stabilization fund assessments on credit unions," NCUA Acting Board Chairman J. Mark McWatters said in a statement.