Merrill Lynch and Credit Suisse Fined for Misrepresenting Important Facts about Mortgage-Backed Securities to Investors


The Financial Industry Regulatory Authority (FINRA) has fined Credit Suisse Securities (USA) LLC $4.5 million, and Merrill Lynch $3 million. The fines arise out of FINRA’s findings that the firms misrepresented historical delinquency rates in connection with the residential subprime mortgage securitizations (RMBS) that the firms underwrote and sold. Upon learning of the errors, Merrill Lynch posted the corrected historical delinquency rates on its website, but Credit Suisse did not.

The misrepresentations concerned 21 subprime RMBS issued by Credit Suisse and 61 issued by Merrill Lynch. Merrill Lynch was acquired by Bank of America but continues to operate under its own individual broker-dealer registration.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, was quoted as saying: “Firms must provide accurate information about the products they offer so that their customers can make informed investment decisions. Credit Suisse and Merrill Lynch failed to monitor and supervise the reporting of historical delinquency rates, depriving investors of information essential to assessing the profitability of mortgage-backed investments.”

Investor advocate J. Boyd Page of Page Perry in Atlanta observed that “This is just another example of the myriad of misrepresentations and omissions that Wall Street routinely made in selling CDOs and other mortgage backed securities.”

Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. Page Perry’s attorneys have extensive experience in representing investors in subprime securities cases. For further information, please contact us.