By Sam Tobin
LONDON (Reuters) -Credit Suisse saw off a case brought against the bank over $100 million of notes linked to residential mortgage-backed securities on Friday, resolving another legacy legal headache for its now owner UBS.
Loreley Financing, a special purpose vehicle set up by German bank IKB, had sued Credit Suisse (SIX:CSGN) in London's High Court over the notes it bought as part of a collateralised debt obligation deal in 2007, just before the 2008 financial crisis.
Many residential mortgage-backed securities (RMBS) carried triple-A ratings, despite being backed by subprime and other risky home loans.
Jersey-registered Loreley argued at the trial which began in April that it bought the notes because of Credit Suisse's "false and dishonest representations" about their value.
Loreley also said the representations were part of a "systemic fraud" in relation to the securitisation of RMBS.
Judge Sara Cockerill ruled in favour of Credit Suisse, which had denied there was any fraud in relation to its RMBS business, saying there was no evidence to support the case of systemic fraud beyond "isolated documents".
Loreley's lawyer Tim Lord repeatedly referred at the trial to Credit Suisse's $5.28 billion settlement with the U.S. Department of Justice, which was agreed in 2016 to settle claims that it misled RMBS investors.
But Credit Suisse argued the settlement with the DOJ had made no reference to dishonesty or fraud.
Loreley's London lawyers, IKB and UBS declined to comment.
UBS inherited several legal disputes after its state-assisted rescue of Credit Suisse earlier this year, some of which have since been resolved.
Last month, it reached a settlement with Mozambique over the "tuna bond" scandal, having agreed in July to pay $388 million to British and U.S. regulators over Credit Suisse's dealings with private investment firm Archegos Capital Management.