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Billion-Dollar Suit Filed Against Citi and Credit Suisse
The American Lawyer
August 06, 2009
The banks of America should probably start replacing "Most Wanted" posters of bank robbers with head shots of John Quinn and his partners at Quinn Emanuel Urquhart Oliver & Hedges. As we've told you about a million times, Quinn litigators -- who aren't encumbered by corporate client relationships -- have been having a grand old time filing cases against banks since the economy went into free-fall. Here's our most recent coverage, for example, of Quinn's fraud case against J.P. Morgan, brought on behalf of the parent company of Washington Mutual; and here's news of its recent suit on behalf of Access Industries against Morgan.
Quinn's latest targets are Citibank and Credit Suisse. In a 65-page New York state Supreme Court complaint filed on Monday, Quinn's client, the bond insurer Ambac Credit Products, alleges that because of fraud by the banks, it was induced to provide $2 billion in coverage for collateralized debt obligations that were secured by high-risk subprime mortgages. [Hat tip: Courthouse News] Just before Ambac provided coverage, the complaint asserts, Citi claimed the mark-to-market valuation of the CDOs was 96 cents on the dollar, when, Ambac alleges, it was actually no more than 79 cents.
The complaint also alleges that Citi misrepresented market demand for the securities and otherwise misrepresented the quality of the CDOs.
Quinn has something of a monopoly in representing monoline insurers in suits against banks. Here's our story about its suit for MBIA against Merrill Lynch, which is pending in New York state Supreme Court in Westchester. The firm also represented XL Capital (now Syncora) in a bellwether swaps case against Merrill; after Quinn lost a summary judgment motion, that case settled.
Lead counsel for Ambac is Jonathan Pickhardt. No word on defense counsel for Citi or Credit Suisse, but a Citi spokesperson said in an e-mail, "We believe this suit is without merit and will defend ourselves vigorously."
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
