Credit Suisse owes $400 million in CDO case

Credit Suisse Securities LLC of New York has been ordered by an arbitration panel to cash out an institutional client that held $400 million in collateralized debt obligations. The Feb. 11 decision by an arbitration panel of the Financial Industry Regulatory Authority Inc. said that the claimant, STMicroelectronics NV, a Geneva -based manufacturer of semiconductors, alleged that it had requested investments in student loan auction rate securities, but that its funds were instead invested in CDOs. STMicroelectronics was instructed to transfer ownership of its CDO portfolio to Credit Suisse upon receipt of the $400 million. Credit Suisse was also ordered to pay $1.5 million in “financing fees,” another $2 million in interest payable, and $3 million in attorneys’ fees. Hearings in the case spanned 14 days in December and January. "We respectfully disagree with the arbitration panel’s award and are reviewing our legal options," said Credit Suisse spokesman David Walker in a statement. Bloomberg News earlier today reported the decision by Finra, which is based in Washington and New York.