New York AG Planning to Sue Credit Suisse (CS) Over Misleading MBS Sales

Credit Suisse (NYSE: CS) shares are notably lower in early trading today amid reports that it might be subject to a federal lawsuit.

New York attorney general Eric Schneiderman is prepping to file a civil suit against the Swiss bank, alleging that it mislead investors with respect to sales of mortgage-backed securities. Filing of the suit is expected Wednesday, according to Reuters.

The suit will claim that Credit Suisse misrepresented quality of the loans packaged in the securities. The investors are said to have lost investors a total of $11.2 billion or more.

Schneiderman filed against JPMorgan (NYSE: JPM) last month over investor losses tied to Bear Stearns MBS sales. Schneiderman is able to do this under the Martin Law, which does not require proof of intent to deceive to file a suit. The Martin Law is New York specific.

News comes just as Credit Suisse is looking to revamp several key divisions, which includes merging its investment banking and private bank units. Earlier today, the firm named Gael de Boissard to co-lead its investment-banking unit. Merging the two units will speed the cost-cutting process, Credit Suisse avers.

In October, Credit Suisse said it would trim its global workforce by 10,000 positions, leading to savings of about $1.06 billion by the end of FY15.

Ahead of the bell, shares are down 2.9 percent Tuesday.

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