IKB, a German commercial bank, has never been a well-known company in the United States, even in financial circles. But it was able to raise its profile significantly--and unfortunately--after it was named as one of the big victims in the SEC's famous suit against Goldman Sachs that alleged all sorts of CDO-related marketing fraud.

IKB was one of the banks that were sold CDOs even as John Paulson, who allegedly had a hand in picking the securities to be included in the CDO, acquired a massive short position. The bet did not turn out well for IKB. Recall that Goldman Sachs eventually settled the case for $550 million.

Now IKB is back in the news, and once again it is because of legal action. It has just sued Citigroup over various marketing and sales practices over the $4.2 million in mortgage-backed securities that the German bank bought from it. IKB, based in Dusseldorf, accuses Citigroup of fraud, negligent misrepresentation, unjust enrichment and breach of contract in a one-page filing in state court in New York, according to Bloomberg.

The German lender wants a judge to rescind the sale and award unspecified punitive damages. IKB similarly sued JP Morgan Chase not too long ago. This is a decent example of the litigation bubble that seems to be building. The time is now for aggrieved banks and investors to press their case. We may see a lot more suit across the entire MBS daisy chain, encompassing more private suits and government actions.

For more:
- here's the article

Related articles:
More aggrieved investors to target Goldman Sachs?   
Deutsche Bank sold CDOs similar to Goldman Sachs'