IL&P chairwoman Gillian Bowler

A New York Court has prevented Irish Life & Permanent (IL&P) suing investment bank Credit Suisse through the US courts for losses linked to the Swiss bank's alleged failure to declare the full extent of its problems with sub-prime mortgage products.

The ruling by Judge Victor Marrero of the Southern District Court of New York will have major implications for investors and pension funds who lost billions of euro in the stock market crash, industry observers say.

Irish Life has until 20 October to decide whether to appeal the decision to dismiss a class action lawsuit that also involves Austrian bank Erste.

The judge ruled that the court had no jurisdiction because the banks had bought Credit Suisse shares through the Swiss exchange, and not in the US.

In October last year, Irish Life joined the suit alleging Credit Suisse, its chief executive Brady Dougan, chief financial officer Renato Fassbind, chief risk officer Wilson Ervin, and investment banking head Paul Calello, failed properly to write down the value of its residential mortgage-backed securities in recent years.

Individuals in the class action, Kevin Cornwell and John M Grady, were prevented from preceding against Credit Suisse because they bought the shares through American Depository Receipts (ADRs), which only account for a small fraction of the Swiss shares traded, the judge ruled.

The lawsuit, if successful, could have opened Credit Suisse to claims for damages from all investors who lost money if they had purchased its shares during the period 15 February 2007 through 14 April 2008.

In the detailed ruling, Judge Marrero said Credit Suisse during the 1990s and early 2000s, and other investment banks, purchased "risky" securities backed by high-risk mortgages. "Despite the faltering housing market and its effects, Credit Suisse reported strong results for the 2006 fiscal year and the first two quarters of 2007," he said.

The judge said, on 28 August 2007, the Securities and Ex­change Commission wrote to Credit Suisse chief Fassbind asking for information regarding Credit Suisse's sub-prime exposure.

A spokesman for Irish Life said it "was considering an appeal" and believed the judge's ruling was based on the issue of the court's jurisdiction, and not on the substance of its case.