According to a recent article on Bloomberg.com, a Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Credit Suisse Group AG, Switzerland’s second-biggest bank, to pay more than $400 million to STMicroelectronics NV over claims the banking giant improperly sold the semiconductor maker auction-rate securities. The FINRA arbitration panel awarded the Claimant $400 milllion in damages plus an additional $6.5 million in attorney’s fees.
Auction-rate securities (ARS) are long-term bonds or perpetual shares with interest rates adjusted periodically through a dealer-run bidding process. The market collapsed about a year ago when dealers withdrew support, leading to hundreds of failed auctions, higher borrowing costs for some issuers and leaving thousands of investors stuck with securities they couldn’t’t sell.
In a series of August 2008 blogs, we reported when the U.S. Securities and Exchange Commission and state regulators forced several banks and brokerages, including Wachovia, Citibank and Merrill Lynch, to buy back more than $50 billion in auction-rate securities to settle claims that the firms falsely touted the investments as safe, cash-like investments. In September, 2008, Credit Suisse agreed to buy back about $550 million in securities from retail clients and pay a $15 million fine to resolve probes by state regulators.
If you hold auction rate securities or auctions rate preferreds, please contact our office to discuss your options for recovering your funds.