ALEXANDRIA, Va. (6/21/11)—Seeking to recover millions of dollars from securities firms alleged to have violated federal and state securities laws, the National Credit Union Administration (NCUA) filed two lawsuit Monday charging misrepresentation in the sale of hundreds of securities, and has said more suits could come. The Credit Union National Association (CUNA) backed the NCUA action, having encouraged the agency to take “all reasonable actions” available to pursue effective restitution from securities firms who “share the culpability for the events that led to the corporate failures.” “While this is a very positive step and the agency should be commended for taking it, the fact is that a very tough road remains ahead. The institutions being sued by NCUA have significant resources to defend their actions, and will no doubt use those resources to the fullest extent,” CUNA President/CEO Bill Cheney remarked Monday. The NCUA took the legal action in its role as liquidating agent for five failed corporate credit unions. The suits filed Monday are against J.P. Morgan Securities, LLC, and RBS Securities, Inc. and involve damages in excess of $800 million. The NCUA said its officials also are discussing losses with a number of other sellers, issuers and underwriters and if they are unable to reach reasonable settlements on behalf of the liquidated credit unions with these additional parties, the agency will likely bring additional lawsuits. Those suits could bring the request for damages into the billions. The NCUA said the suits are intended to “recover losses from the purchase of securities that caused the failures” of the five, large wholesale credit unions. Those institutions are U.S. Central, Western Corporate, Southwest Corporate, Members United Corporate, and Constitution Corporate. “NCUA has a responsibility to do everything in our power to seek maximum recoveries from those involved in the issuing, underwriting and sale of the faulty securities that resulted in the failures of five of the largest wholesale credit unions. Those who caused the problems in the wholesale credit unions should pay for the losses now being paid by retail credit unions,” said NCUA Chairman Debbie Matz announcing the lawsuits. The NCUA’s suits claim the sellers, issuers and underwriters of the “questionable securities” made numerous material misrepresentations in the offering documents. “These misrepresentations caused the corporate credit unions that bought the notes to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial. The corporate credit unions invested in mortgage-backed securities that experienced dramatic, unprecedented declines in value, effectively rendering the institutions insolvent,” the NCUA said. The NCUA said any recoveries from these legal actions would reduce the total losses resulting from the failure of the five corporate credit unions and would help to reduce the amount of future corporate credit union stabilization fund assessments on credit unions. Use the resource link to see additional actions the NCUA has taken with the intention of mitigating losses to the credit union system from these corporate failures.