Credit Suisse to pay $400 million to end U.S. bond lawsuits
By Katharina Bart and Nate Raymond
ZURICH/NEW YORK (Reuters) - Credit Suisse Group AG CSGN.VX has agreed to pay at least $400 million to settle lawsuits by investors over the Swiss bank's role in raising money for a healthcare financing company that collapsed in a $2.9 billion fraud more than a decade ago.
The settlement averts a trial in Manhattan federal court that had been scheduled to begin in two weeks. It stems from the activities of National Century Financial Enterprises Inc, which filed for bankruptcy protection in November of 2002.
Investors accused Credit Suisse of selling National Century notes and defending their creditworthiness despite knowing that the company misused investor funds, and while missing red flags that National Century co-founder and Chief Executive Lance Poulsen masterminded the fraud.
"This agreement represents a full and final settlement in respect of this noteholder litigation against Credit Suisse," Credit Suisse said in a statement on Thursday.
Credit Suisse will pay $400 million to a group of plaintiffs that includes the state of Arizona, AllianceBernstein Holding LP (AB.N: Quote) and Allianz SE's (ALVG.DE: Quote) Pimco unit, the plaintiffs' lawyer, Kathy Patrick of Gibbs & Bruns, said in a phone interview.
Investors who brought the lawsuits had bought National Century notes from 1998 to 2002.
In addition to the $400 million accord with Gibbs & Bruns' clients, Credit Suisse has also agreed to separate settlements with Lloyds TSB Bank Plc 48IY.L and MetLife Inc (MET.N: Quote).
Lloyds TSB spokesman Ed Petter confirmed the settlement but said its terms were confidential. MetLife spokesman Christopher Breslin said his company reached an "amicable resolution" to the case, addling it was glad "to put this issue to rest." Continued...