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Credit Suisse Pays STMicro $400 Million

by on16 February 2009

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Sorry about the investment

 

If life were not bad enough for the Swiss chipmaker STMicro, it has had to take legal action against its stockbroker Credit Suisse.The outfit went to arbitration against  Credit Suisse claiming that the broker had mishandled its investment in auction-rate securities. The stockbroker was ordered to pay $400 Million as a result of the arbitration.

The Financial Industry Regulatory Authority also ordered the bank to pay $3 million in attorney and expert-witness fees, $1.5 million in financing fees and interest on the original value of the ARS until the award is paid.

However  Credit Suisse said that it disagreed with the arbitration panel's award and are reviewing our legal options. The chipmaker told Credit Suisse that it wanted to invest in student-loan securities backed by US instead its funds were put into collateralized debt obligations, some of which were backed by subprime real-estate loans.

Two of its brokers were indicted on fraud charges based on allegations they lied to investors, including STMicro, about how they placed their money in ARS tied to subprime mortgages. They have pleaded not guilty.

More here.

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