Credit Suisse Group AG, the biggest bank in Switzerland by market value, was ordered by a U.S. judge to pay STMicroelectronics NV the remainder of a $431 million award over unauthorized investments in auction-rate securities.
The arbitration award, ordered in 2009 by the Financial Industry Regulatory Authority, was affirmed on March 19 by U.S. District Judge Deborah Batts in New York, who cited a “record replete with evidence of Credit Suisse’s fraud.”
“Credit Suisse has grasped unsuccessfully at straws to avoid payment of the arbitration award in this case,” Batts said in the ruling. The unpaid balance is about $354 million, including $23 million in interest, Geneva-based STMicroelectronics said today in a statement.
Europe’s biggest semiconductor maker, which hired Credit Suisse to make investments for the company, accused the bank of investing in risky securities after claiming it would only invest in student loans backed by the U.S. government. STMicroelectronics sued when the value of the securities fell and in February 2009 won an arbitration award before the Washington-based regulator, known as FINRA.
“We respectfully disagree with the court’s decision and are evaluating an appeal,” Alex Biscaro, a spokesman for Zurich-based Credit Suisse, said today in an e-mailed statement.
At least 19 underwriters and broker-dealers were sued in class-action, or group, lawsuits since the $330 billion market for auction-rate securities collapsed in February 2008. Some have been compelled by regulators to buy back billions of dollars of the securities.