Joel Laitman ()
When a trove of damning internal emails was unsealed last month in a securities suit against Credit Suisse, Gretchen Morgenson of The New York Times wasn’t the only one who snapped to attention. Lawyers at Cohen Milstein Sellers & Toll who are pursuing a separate mortgage-backed securities class action against Credit Suisse subsidiaries also took notice, and on Monday they accused the bank of discovery violations for failing to disclose the documents in their own case.
In a three-page letter to U.S. District Judge Paul Crotty in Manhattan, the plaintiffs lawyers complained that they first learned of the documents from the Times report, which concerned a Boston case brought by Cambridge Place Investment Management. Cohen Milstein’s Joel Laitman wrote that Credit Suisse failed to produce the materials in the New York case even though they provide “direct proof” that the bank violated securities laws, and even though some “were to and from witnesses already deposed in this action, including two individual defendants.”
The letter is the latest twist in a five-year-old case, New Jersey Carpenters Health Fund v. DLJ Mortgage Capital Inc., that claims Credit Suisse duped investors in nearly $2.4 billion in securities by concealing its mortgage unit’s systematic disregard for underwriting guidelines.
Along with the letter, Cohen Milstein submitted more than a dozen examples of potentially damaging emails obtained from the Boston litigation, including internal communications that seem to describe deficiencies in underwriting and quality control. In a 2006 email to two of the defendants, for instance, a Credit Suisse mortgage trading director reported that a quality control chief was being unduly pressured by the head of mortgage acquisition “to approve loans he thinks are unworthy (and he showed me plenty of emails to prove it).” The allegedly bad loans included one to “a gas station attendant living with his mother making 93K,” among several others.
Laitman asked Judge Crotty on Monday to order a new round of document production and depositions in the case in order to augment the material obtained from the Cambridge litigation. He also asked for permission to move for “further relief” under Rule 37—which can include discovery sanctions—”once there is a complete record of all the unproduced documents.” (Laitman declined to comment.)
Bingham McCutchen’s Jeffrey Smith is representing Credit Suisse in the New York case. He directed us to the bank, which said only that it would file a response in the case by Thursday.
Cohen Milstein’s bid for additional discovery comes less than a month after Crotty more than doubled the size of the class. The firm is also leading several other major MBS class actions, including cases against Goldman Sachs, Citigroup Inc. and UBS AG.