J.P. Morgan, Credit Suisse to Pay Combined $400 Million Settlement for RMBS Violations

According to the SEC's order against Credit Suisse, the firm similarly failed to accurately disclose its practice of retaining cash for itself from the settlement of claims against mortgage loan originators for problems with loans that Credit Suisse had sold into RMBS trusts and no longer owned. Credit Suisse "also made misstatements in SEC filings about when it would repurchase mortgage loans from trusts if borrowers missed the first payment due. The firm made $55.7 million in profits and losses avoided from its bulk settlement practice, and its investors lost more than $10 million due to Credit Suisse's practices concerning first payment defaults."

Credit Suisse has agreed to pay $120 million to settle the SEC's charges.

"In many ways, mortgage products such as RMBS were ground zero in the financial crisis," said Robert Khuzami, director of the SEC's Division of Enforcement, and co-chair of the RMBS Working Group, said in a statement. "Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed. Today's actions involving RMBS securities are a continuation of the SEC's strong efforts to pursue wrongdoing committed in connection with the financial crisis."