Big banks sued over bankruptcy

3 May 2011

Big banks sued over bankruptcy
A number of large banks are being sued by Thornburg Mortgage, which has blamed the lenders for it being driven to bankruptcy.

Four separate lawsuits have been filed by the company - with Barclays and Goldman Sachs among those involved.

The most extensive claim is against JPMorgan, Citigroup, Credit Suisse, Royal Bank of Scotland and UBS, which the firm alleged took part in a collective scheme that led to its failings.

Joel Sher, trustee at Thornburg, claimed the five banks worked together and cemented their control over the organisation through a series of unjustified margin calls.

Around $2 billion is being sought through the lawsuit, which stated that the institutions - that had financed Thornburg's mortgage-backed securities - made fraudulent transfers and conveyances.

Last month, European fund manager FTC Capital claimed 12 banks had colluded to depress the cost of borrowing and limited trade between 2006 and 2009 in derivatives associated with the inter-bank lending rate.

By Asim Shah
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