The National Credit Union Administration (NCUA) has sued Wachovia and its subsidiaries, alleging the bank violated federal and state law by misrepresenting securities it sold to now-failed corporate credit unions U.S. Central Federal Credit and Western Corporate Federal Credit Union.
The suit, filed in federal district court in Kansas, is similar to other recent legal actions taken by the NCUA against major financial institutions, including J.P Morgan Securities and Goldman Sachs.Â Earlier this month, the NCUA settled two such lawsuits against Deutsche Bank Securities and Citigroup, which agreed to pay the federal credit union supervisor $145 million and $20.5 million, respectively.
The NCUA is tasked with minimizing the exposure of its insurance fund to the costs of the credit unions' failure. Corporate credit unions are wholesale credit unions that provide various services to retail credit unions.
"NCUA continues to do everything within our authority to seek maximum recoveries and ensure that those who caused the problems in wholesale credit unions pay for the losses incurred by retail credit unions," NCUA Board Chairman Debbie Matz said in a statement. "By filing these suits, we intend to hold responsible parties accountable for their actions."
NCUA's complaint alleges that there were numerous material misrepresentations made by the sellers, issuers and underwriters in the offering documents of securities sold to the failed corporate credit unions.