The New York Attorney General has sued JPMorgan Chase for allegedly defrauding investors who lost more than $20bn (£12bn) on mortgage-backed securities sold by Bear Stearns.
JPMorgan bought the investment bank Bear Stearns in March 2008.
It said that it would contest the allegations.
This is the first action to come out of a working group created by US President Barack Obama looking into the causes of the 2008 financial crash.
US mortgage-backed securities were the investment products that sparked the global financial crisis in 2008.
In essence, each security or bond was linked to pools of US mortgage loans, many of which were classified as sub-prime - mortgages awarded to high-risk and low-wage homeowers.
When many of those home-buyers defaulted on their mortgages as the US property bubble burst, it turned the linked securities into bad debt.
The civil suit, filed by New York Attorney General (NYAG) Eric Schneiderman, accuses Bear Stearns of failing to ensure the quality of loans underlying residential mortgage-backed securities.
It claims the bank "systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans".
It says that this led to the inclusion of mortgages on which borrowers were likely to default, and that losses in 2006 and 2007 totalled more than a quarter of the original value.
The NYAG wants the company to pay an undisclosed amount of damages for investor losses "caused, directly or indirectly, by the fraudulent and deceptive acts".
However, in a statement, JPMorgan said the allegations concerned actions by Bear Stearns before it bought the investment bank.
JPMorgan said: "The NYAG civil action relates to Bear Stearns, which we acquired over the course of a weekend at the behest of the US government. This complaint is entirely about historic conduct by that entity."
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