The state is seeking $1.5 billion from the banks. The lawsuit alleges that the banks misled the Virginia Retirement System about the quality of mortgage bonds purchased in the years leading up to the financial meltdown, according to a Reuters report.
The retirement fund purchased 220 securities during those years, Reuters reported. According to Virginia Attorney General Mark Herring, nearly 40% of the mortgages backing those securities were fraudulently represented as posing a low risk of default.
“The message today is clear. If you try to rip off or defraud Virginia consumers or Virginia taxpayers, you will be caught and you will be held responsible,” Herring said in a statement.
The banks named in the lawsuit include Bank of America, Citigroup, Deutsche Bank, Credit Suisse, Morgan Stanley and JPMorgan Chase.
The state of Virginia is suing 13 banks for allegedly defrauding the state’s retirement fund by selling it toxic mortgage bonds.