{"id":5163,"date":"2011-06-15T00:00:00","date_gmt":"2011-06-15T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2011\/06\/credit_suisse_ordered_to_pay_s"},"modified":"2022-04-04T13:37:37","modified_gmt":"2022-04-04T18:37:37","slug":"credit-suisse-ordered-to-pay-s","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/credit-suisse-ordered-to-pay-s\/","title":{"rendered":"Credit Suisse Ordered to Pay STMicroelectronics N.V. $404M Over Improper ARS Investment"},"content":{"rendered":"

In STMicroelectronics N.V. v. Credit Suisse Securities (USA) LLC, 2d Cir., No. 10-3847-cv, 6\/2\/11<\/em>, the US U.S. Court of Appeals for the Second Circuit upheld an arbitration panel\u2019s award against Credit Suisse Securities (USA) LLC for $405 million. The financial firm was accused of improperly investing STMicroelectronics N.V. (STM)\u2019s money in high-risk auction-rate securities.<\/p>\n

The court says that Credit Suisse offered ST the opportunity to invest in ARS in April 2006 even though the business needed to have cash or its equivalents easily at hand due to the cyclical nature of what it does. Prior to that, ST had invested its funds in safe, liquid securities, including money market deposits.<\/p>\n

The court says that the financial firm \u201cexplicitly proposed\u201d ARS investments and ST \u201cexplicitly accepted\u201d investing only in these securities, which were supported by student loans that were federally guaranteed. Yet within a few days, the court says that Credit Suisse started buying higher yield, higher risk ARS for ST.<\/p>\n

By January 2007, none of the ARS were backed by student loans anymore. Yet the financial firm sent an email to ST that concealed the investments \u201ctrue nature.\u201d All of ST\u2019s ARS failed after the market collapsed and two of the Credit Suisse brokers in charge of the ST account would go on to be convicted of conspiracy and securities fraud charges.<\/p>\n

ST later Financial Industry Regulatory Authority arbitration claim against Credit Suisse. The U.S. District Court for Southern District of New York later confirmed the panel’s $406 million.<\/p>\n

In its appeal, Credit Suisse attacked the award, claiming that arbitrator John J. Duval Sr. gave inaccurate and incomplete disclosures and was misleading because he suggested that he \u201cworked for \u2018both sides,\u2019\u201d when he actually was an expert witness for the claimants. The court rejected that contention. Credit Suisse also accused the arbitrators of \u201cmanifestly disregarding\u201d the law when it reached its finding. The court rejected this contention too. The appeals court did, however, find that the district court should have credited the amount of the award funds that ST got from the sale of certain Deutsche Bank securities and, as a result, lowered the amount of interest due.<\/p>\n


\nMore Blog Posts:<\/strong>
\nCredit Suisse Broker Previously Convicted for Selling High Risk ARS is Barred from Future Securities Law Violations<\/a>, Institutional Investors Securities Blog, February 12, 2011<\/p>\n

District Court in Texas Decides that Credit Suisse Securities Doesn\u2019t Have to pay Additional $186,000 Arbitration Award to Luby\u2019s Restaurant Over ARS<\/a>, Stockbroker Fraud Blog, June 2, 2011<\/p>\n

Judge Gives Lower Sentence to Former Credit Suisse Broker Convicted of Auction-Rate Securities Fraud<\/a>, Stockbroker Fraud Blog, January 30, 2010<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In STMicroelectronics N.V. v. Credit Suisse Securities (USA) LLC, 2d Cir., No. 10-3847-cv, 6\/2\/11, the US U.S. Court of Appeals for the Second Circuit upheld an arbitration panel\u2019s award against Credit Suisse Securities (USA) LLC for $405 million. The financial firm was accused of improperly investing STMicroelectronics N.V. (STM)\u2019s money in high-risk auction-rate securities. The […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3865,3817,3752],"tags":[],"class_list":["post-5163","post","type-post","status-publish","format-standard","hentry","category-auction-rate-securities","category-credit-suisse","category-financial-firms"],"yoast_head":"\nCredit Suisse Ordered to Pay STMicroelectronics N.V. $404M Over Improper ARS Investment — Investor Lawyers Blog — June 15, 2011<\/title>\n<meta name=\"description\" content=\"In STMicroelectronics N.V. v. 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