Credit Agricole accused of fraud by sub-prime product investors
CREDIT Agricole has been accused of fraud in the United States by investors in the bank’s sub-prime mortgage-backed securities.
Several firms under the Jersey-based Loreley name brought a case in a New York state court last week over three collateralised debt obligations (CDOs) named Orion 2006-1, Pyxis 2006-1, and Millstone IV, which they claim were designed to fail.
The Loreley firms were advised and funded by German bank IKB, which is in turn being sued by Credit Agricole in the UK over its involvement in another mortgage-backed security named Havenrock II.
“Credit Agricole CIB has been notified of the IKB US filing which is clearly related to our UK $1.675bn high court 2009 lawsuit against IKB for fraud. We are confident this counter-action by IKB is without merit,” said a Credit Agricole spokesperson last night.
The ongoing case is one of several relating to CDOs created in the run-up to the financial crisis. Goldman Sachs and Societe Generale are currently defending a lawsuit from German bank LBBW, which claims it lost $37m after being misled about a CDO’s risk.