Ambac Assurance Corp., a business unit of bond insurer ""Ambac Financial Group Inc."":http://www.ambac.com, has sued ""Credit Suisse Securities"":http://www.credit-suisse.com/us/en and its affiliate DLJ Mortgage Capital over mortgage-backed securities (MBS) Ambac insured in 2007.
[IMAGE]According to a _Reuters_ report, Ambac alleges ""pervasive and material misrepresentations"" on the part of Credit Suisse and DLJ.
[COLUMN_BREAK]The lawsuit filed last week in the New York State Supreme Court, claims the two investment companies misled the insurer about the risk associated with a pool of more than 2,000 mortgage loans, which have defaulted at a ""remarkable rate"" because many of the borrowers had little or no ability to repay their loans, the news agency said.
Ambac is looking to recover tens of millions of dollars, in addition to punitive damages. _Reuters_ says the insurer has already paid out $44 million in claims on the MBS in question.
""Fraud by borrowers, brokers, and/or originators was so rampant that Credit Suisse either knew or recklessly disregarded its prevalence,"" the lawsuit says, according to a _Wall Street Journal_ report.
A spokesperson for Credit Suisse told the news agency that the lawsuit was without merit, and that his organization plans to defend itself ""vigorously.""
Credit Suisse faces a similar suit from bond insurer ""MBIA"":http://www.mbia.com.