Banks facing lawsuit

DETAILS of another lawsuit against banks over alleged mis-selling of mortgage-backed securities in the run-up to the credit crisis emerged yesterday.

Cambridge Place Investment Partners, based in the US, has filed a 1.6 billion claim against 15 banks including Royal Bank of Scotland, HSBC and Barclays.

The lawsuit, lodged in the US, alleged that the banks were "complicit in creating an environment of improper lending practices" and failed to conduct proper due diligence.

It claims the bank defendants, which also include JPMorgan, Citigroup, Credit Suisse, Deutsche Bank, Merrill Lynch, UBS, Goldman Sachs and Morgan Stanley, profited from "rampant violations of sound lending practices".

The complaint accuses Greenwich Capital, part of RBS, of mis-selling 173 million worth of securities between 2005 and 2007, Barclays of mis-selling 94m and HSBC of mis-selling 42m. The case is being handled by a New York-based law firm, Bernstein Litowitz Berger & Grossman.

A raft of other claims are being brought against banks by pension funds and investors.

The Cambridge Place lawsuit is seen as being a potential test case for other fund managers who lost money.