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* More than half of case over $715 mln securities survives
* NCUA evaluates options on dismissed claims
By Jonathan Stempel and Aruna Viswanatha
April 10 (Reuters) - A federal judge has narrowed a U.S.credit union regulator's lawsuit against Credit Suisse Group AG over the sale of $715.5 million of mortgage-backedsecurities to failed corporate credit unions.
Monday's decision by U.S. District Judge John Lungstrum inKansas City, Kansas, nonetheless allows the National CreditUnion Administration to pursue more than half its case againstthe Swiss bank.
It suggests that the regulator may be able to recoverconsiderably more than the $335.8 million it has alreadyobtained in settlements with four major banks.
The NCUA is pursuing 10 lawsuits on behalf of five creditunions it seized in 2009 and 2010 over losses they suffered on$14.1 billion of mortgage-backed securities amid a crumblinghousing market.
Half of the securities were sold by JPMorgan Chase & Co, or Bear Stearns Cos or Washington Mutual Inc, both ofwhich JPMorgan bought in 2008.
Wholesale credit unions suffered more pain than retailcounterparts because they had more leeway on how to invest.
PLAUSIBLE CLAIMS
The Credit Suisse case relates to the sale between 2005 and2007 of 20 residential mortgage-backed securities to threecredit unions for which the NCUA board is now a conservator.
According to the regulator, Credit Suisse's offeringdocuments for the securities misleadingly represented that theunderlying loans were underwritten properly, and understated ormisstated the risks of those loans.
Credit Suisse countered that any faults were minor, and thatthe credit unions were on notice that some loans could be risky.
But Lungstrum said the NCUA could pursue federal claims overeight certificates for which the credit unions had spent $417.6million, saying the regulator had "stated plausible claims, withsufficient specificity," that securities laws were violated.
The judge nonetheless dismissed federal claims relating tothe other 12 certificates, which cost $297.9 million, andCalifornia and Kansas state law claims on all 20 certificates.
He said this was because the NCUA missed deadlines to bringsome claims within one or two years of discovering problems, orthree or five years of the alleged sales or violations.
Nonetheless, he said some of the claims could be saved undera federal "extender" statute that gives government entitiesacting as conservators or liquidating agents more time to sue.
"We respectfully disagree with portions of the decisionfinding some of our claims untimely, and we are evaluating ouroptions with regard to those portions," NCUA spokesman JohnFairbanks said.
Credit Suisse spokesman Drew Benson declined to comment.
APRIL 29 HEARING
Eight of the 10 lawsuits are being handled in Kansas City,near the former home of failed U.S. Central Federal CreditUnion, which bought some of the securities at issue.
An April 29 hearing has been scheduled for the eight cases,including three against JPMorgan and one each against CreditSuisse, Barclays Plc , Royal Bank of ScotlandGroup Plc , UBS AG and WellsFargo & Co.
A case against Goldman Sachs Group Inc and anothercase against RBS are being handled in California, the NCUA said.
Banks that have settled with the NCUA are Bank of AmericaCorp, Citigroup Inc, Deutsche Bank AG and HSBC Holdings Plc . Bank of America's$165 million settlement, announced on April 2, is the largest.
The case is National Credit Union Administration Board v.Credit Suisse Securities (USA) LLC et al, U.S. District Court,District of Kansas, No. 12-02648.
