STMicro wins payout from Credit Suisse
GENEVA - European chipmaker STMicroelectronics said Monday it was awarded USD 406 million (CHF 477 million) by a US mediation panel in a dispute with Swiss bank Credit Suisse Group over the unauthorised purchase of auction-rate securities.
STMicro said the award covered "compensatory damages, as well as interest, attorney’s fees, and consequential damages". It came in addition to USD 25 million already awarded, the Geneva-based company said.
STMicro sought mediation from the Financial Industry Regulatory Authority, or FINRA, because Credit Suisse bought auction-rate securities instead of the federally guaranteed student loan securities STMicro asked for, it said.
The auction-rate securities market involved investors buying and selling instruments that resembled corporate debt whose interest rates were reset at regular auctions, sometimes as frequently as once a week. They were sold as being as safe as cash, but the market for them fell apart amid the decline in the broader credit markets.
Credit Suisse said it was disappointed by the FINRA ruling.
"We respectfully disagree with the arbitration panel’s award and we are reviewing our legal options", said spokeswoman Corene Sullivan.
Switzerland’s second-largest bank agreed in 2008 to buy back USD 548 million in auction-rate securities and pay a USD 15 million fine to settle an investigation into the sale of the risky investments.
STMicro in January announced a fourth-quarter net loss of USD 366 million and said it would cut about 4,500 jobs worldwide.
The company’s shares traded 3.1 percent higher at USD 5.61 on the New York Stock Exchange.
[AP / Expatica]