NEW YORK (Reuters) - New York’s highest court on Tuesday curbed the state attorney general’s ability to fight fraud on Wall Street, awarding a victory to Credit Suisse Group AG (CSGN.S) as it tries to end an $11 billion lawsuit over risky mortgage securities.
Reversing a lower court ruling, the state Court of Appeals said claims under the Martin Act, a 1921 law giving the attorney general broad power to pursue civil and criminal cases over securities fraud, must be brought within three years of the alleged wrongdoing, not six years.
“The Martin Act imposes numerous obligations - or ‘liabilities’ - that did not exist at common law, justifying the imposition of a three-year statute of limitations,” Chief Judge Janet DiFiore wrote.
Tuesday’s 4-1 decision could doom a November 2012 lawsuit brought by then-Attorney General Eric Schneiderman accusing Credit Suisse of lying about the quality of loans underlying residential mortgage-backed securities it sold in 2006 and 2007, resulting in steep investor losses during the global financial crisis.
But the appeals court gave Schneiderman’s successor, Barbara Underwood, a chance to show a lower court that Credit Suisse committed fraud under common law, subjecting it to a six-year statute of limitations under the state’s Executive Law.
The lawsuit had accused Credit Suisse of concealing known defects in home loans underlying its securities in a bid to sell more securities and generate higher fees.
Two lower courts rejected the bank’s argument that New York waited too long to sue. Underwood took over the case after Schneiderman resigned last month.
“This decision will have no impact
