(CN) - Stichting Pensioenfonds ABP, the largest pension fund in the Netherlands and among three of the largest in the world sued Credit Suisse Group AG for allegedly misrepresenting the risk associated with the purchase of residential mortgage backed securities. "ABP purchased securities that were far riskier than had been represented, backed by mortgage loans worth significantly less than had been represented," the complaint states.
     ABP purchased securities collateralized against mortgages originated through Credit Suisse subsidiaries or purchased from third-party originators, according to the complaint.
     "Rather, taking advantage of an unprecedented boom in the securitization industry, Credit Suisse deposited the loans into special purpose entities or 'trusts,' and then repackaged the loans for sale to investors in the form of RMBS," the suit states.
     Credit Suisse, the complaint says, "touted the strength of their underwriting guidelines and standards," and "repeatedly assured investors as to the soundness of the appraisals used to arrive at the value of the underlying properties and their compliance with Uniform Standards of Professional Appraisal (USPAP)."
     But ABP says the loans were not subject to quality control procedures and "defendants knew of the wholesale and systematic abandonment of underwriting guidelines both by Credit Suisse's own affiliated originators, as well as by various third-party originators."
     Since they operated primarily to generate loans for Credit Siusse's RMBS operations and didn't keep the loans for their own portfolios, affiliated lenders intentionally granted mortgage loans to borrowers that did not meet eligibility requirements, ABP claims.
     The ABP cites the collection of massive fees and Credit Suisse's demand for as many securitized loans as possible motivation, driving third-party originators to offer loans to unqualified borrowers, "knowing that Credit Suisse could securitize even risky, low-quality loans."
     The ABP suit is one in a series of investigations launched by numerous government agencies into the subprime mortgage lending industry and subprime mortgage lending practices by major banks and companies, and ABP cites in its complaint a subpoena issued by New York State Attorney General Andrew Cuomo in May 2010 to Credit Suisse and seven other banks in connection with a suspected scheme that involved deceiving rating agencies about the risks associated with the RMBS they sold.
     Bloomberg Business Week reported July 25, 2011 property owners in luxury resorts in Idaho and Montana joined a $2.5 billion suit against the company, claiming it made predatory bank loans in order to gain control of the properties when the bills couldn't be paid. The lawsuit was originally filed in January 2010 on behalf of 3,000 investors who bought land or homes on four developments, including Tamarack Resort in Valley County Idaho and the Yellowstone Club near Big Sky, Montana.
     And in March 2011 the company agreed to a $70 million settlement arising from a class action complaint alleging the bank artificially inflated its stock prices by misleading investors about its mortgage holdings.
     Finally, in September 2011, the Financial Times reported the SEC had launched an investigation into whether Credit Suisse misled its own shareholders about the number of defaulted loans it might be forced to repurchase.
     
     The pension fund is represented by Jay W. Eisenhofer, Geoffrey C. Jarvis, Deborah A. Elman and Robert D Gerson of Grant and Eisenhofer in New York.