A microchip maker is suing Credit Suisse, alleging the Swiss bank put $450 million into auction rate securities without authorization and made threats of retaliation when the company demanded its money and threatened to sue.
“Rather than siding with customers who had been victimized, Credit Suisse Group aligned itself with its wholly owned subsidiary Credit Suisse Securities and its corrupt brokers and directors,” STMicro says in the complaint filed in federal court in Brooklyn.
Credit Suisse is fighting back, calling the lawsuit “meritless,” according to Bloomberg.
Credit Suisse Sued Over Auction-Rate Securities [Bloomberg]
Credit Suisse
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Bear Stearns
The Bear Stearns Name Lives On…At Least On The Lacrosse Field!
By John CarneyA few weeks after it was revealed that Bear Stearns would be acquired by JP Morgan Chase, the Wall Street Journal’s Kelly Evans reported on the unwritten fate of Bear Stearns champion lacrosse team.
“Among the remaining questions hanging over Bear Stearns Cos. is this: What happens to its lacrosse team?” Evans wrote. “Bear Stearns players are trying to keep the team together even though the firm.”
Last year the Bear Stearns team defeated rival Lehman Brothers in triple overtime. It followed this with an upset victory over Credit Suisse to the inaugural Gotham Lacrosse tournament for the Wall Street league. Now Bear Stearns has been extinguished in the world of finance, while Lehman Brothers faces challenges that have forced it to go an extraordinary fund raising spree.
The first pages of the post-acquisition fate of the Bear Stearns team will be written tomorrow. For more details, follow the jump.
Credit Suisse announced this morning that it will be cutting 500 jobs in investment banking and “administrative support” divisions. Spokesman Bruce Corwin claimed the layoffs are due to shrinking client demand, though one might note the “coincidence” between the start of the tortuously long summer lines at the Shake Shack and a sudden reduction in headcount. Luckily, for any interns tasked with spending three quarters of his/her June/July/August waiting to order someone else’s Shroom Burger, we’re told that the cuts are worse than what’s being reported. Supposedly over half the real estate finance group “will be gone before the end of the day,” and there will be “severe carnage” across the entire firm. Severance packages are said to include two months pay, period.
On the bright side, let’s give it up for whoever’s idea it was to break the layoffs news (and the inevitability forthcoming news of blown earnings) on the same day rival Swiss bank UBS came out with a fifty page report detailing in easy bullet-proof form* how it went about systematically destroying value over the last year or so. That was smart. Very smart.
Credit Suisse Says It’s Cutting 500 Jobs as Client Demand Wanes [Bloomberg]
*Helpful for anyone interested in following suit but unsure where to start.
It looks like Credit Suisse is getting ready to front-run the financing syndicate for the pending $20 billion buyout of Clear Channel Communications. Reuters reporters Jonathan “Keen Eye” Keehner and Brit beauty Megan Davies are reporting that a source tells them the Swiss bank has called potential investors regarding a chunk of the loans and asked what price they would be interested in paying.
Lenders typically attempt to make a coordinated effort to bring loans to market but Credit Suisse has already shown that it is willing to break with this practice. It previously sold off its commitments to the acquisition funding of Harrah’s Entertainment Inc.
DealBreaker has been told by sources that Credit Suisse is eager to move its backlog of loan commitments so that it can participate in the financing of new deals at a time when the balance sheets of competitors may still be weighted down by unsold leveraged loans.
CS looks to sell Clear Channel loans – source [Reuters]
A lot of people are acting all shocked and dismayed over the little slip-up that happened at Credit Suisse. Saying they can believe something like this would happen over at Bear, where Jimmy Cayne spends all the money on chips and forgets to leave an IOU, and UBS, where God retroactively punishes, and Citi, where you’ve got eight people sharing one chair and nobody can even hear themselves think, but not at CS. Bad things don’t happen to good people and bad things like multi-billion dollar mistakes certainly don’t happen to good people who live within 200 feet of the Shake Shack. I’ve got news for those of you failing to “get” how Credit Suisse could suddenly come up with this gigantic fuck-up, worthy of even Citigroup’s praise, when just last week Brady Dougan told reporters everything was cool– there never was any “error.” Well, never any error that D-gan didn’t orchestrate himself.
And no, I’m not talking about fraud. Let’s leave that up to Goldman, the professionals. Listen to D-gan’s wording from yesterday’s call: he defends the bank’s controls, saying it was a “very good sign” the “errors” were caught “rapidly, and…by our internal processes.” You can almost see him cocking his eyebrow slightly, just ever so slightly, too, can’t you? That’s because he’s got a secret– this whole thing was a drill. Not a joke, a drill. Dougan wanted to test the controls in real-time; make sure everything was up to code. Two something billion dollars was sacrificed now so that twenty something billion dollars doesn’t have to be sacrificed later. Don’t believe us? That’s fine, you’re entitled to your own (woefully misguided) opinion, and we know you’ll come around eventually. Get into my head and it’ll make sense. In the meantime, I challenge you all to come up with a more plausible explanation for what happened. It’s an impossible task but nonetheless, the best answer wins lunch at the SS, on Carney.
Credit Suisse Suspends Traders After Mispricings [DealBook]
Dougan’s Assurance of Shareholder `Comfort’ Proves Immaterial [Bloomberg]
Credit Suisse is totally not going steady with Bear Stearns. Ruddy Brady Dougan—the Irishman who is somehow chief executive of the Swiss bank—told Credit Suisse bankers at the meeting of the Committee To Run The World in Davos, Switzerland that a deal to acquire Bear Stearns is a “non-starter,” according to Mark DeCambre at TheStreet.com.
But now everyone is awkward about it. Bear spokespeople decline to comment, look away embarrassed. The Swiss aren’t talking either, just staring down at their shoes mumbling about already having plans and such.
Credit Suisse CEO Squashes Bear Stearns Takeout Talk [TheStreet.Com]
Last week the Prime Minister of Qatar told CNBC’s Maria Bartiromo that the Qatar Investment Authority was “doing something” with one of the Swiss banks, prompting many conclude that the rumors of a large capital injection were true. But the Prime Minister insisted that he wasn’t taking a passive “capital injecting” role but had been out in the market buying stocks.
So which Swiss bank was the QIA “doing something” with and what were they doing? That coy little primte minister wasn’t saying last week but this morning the Sunday Telegraph reports that the QIA is considering buying as much as a 5% stake in Credit Suisse. The rules of the Swiss stock exchange require disclosure if an investment his 3 per cent of the company, and so far no disclosure has been forthcoming.
The Telegraph puts this in context:
Sovereign wealth funds from Abu Dhabi, China, Dubai and Singapore have snapped up large stakes in banks such as Citigroup, Merrill Lynch, Morgan Stanley and UBS as they wilted under the weight of huge losses related to the implosion of the American sub-prime mortgage industry.
Any investment in Credit Suisse by the QIA or another sovereign investor would, however, be seen differently. Other than a $1.9bn writedown related to the sub-prime crisis announced in November, the bank has so far emerged comparatively unscathed from the credit crunch and has avoided the need to seek recourse to cash-rich foreign governments in order to recapitalise its balance sheet.
Qataris poised to snap up $3bn stake in Credit Suisse [Sunday Telegraph]
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Credit Suisse
Layoffs Watch ’08: Current And Upcoming Shitcannings At Credit Suisse And Morgan Stanley, Respectively
By Bess LevinA (very) recently fired Credit Suisse employee tells us that “Every conference room on the CMBS floor has an HR representative working through people as they show up for work. Analysts and Associates seem to be the first out the door.” We understand that for the victims, this might seem like bad news, and yeah, you’ll probably feel weird about going to Shake Shack for a while, but the flipside is that you won’t have to deal with the embarrassment of being employed by Bear Stearns, when the two banks merge. In related news, Morgan Stanley has announced plans for its own population restructuring, as modeled after the redistribution project in the Sudan. If you have any other info, feel free to share, or not share, otherwise, enjoy this one on me:
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Credit Suisse
Lawyers Prosecuting Credit Suisse Banker Ambivalent About Whether Or Not They’re Going For A Guilty Verdict
By Bess LevinFormer Credit Suisse investment banker Hafiz Naseem pleaded not guilty yesterday to allegations that he was “the mastermind” behind a $7 million insider-trading ring in which he leaked details about nine deals that Credit Suisse was an adviser on, including the $45 billion leveraged buyout of TXU. The prosecution’s foolproof rebuttal? Naseem had a gambling problem, and was up to his toes in $5,000 of debt, which is totally a plausible reason for committing a $7 million felony. Geniuses. (A lawyer for Naseem has denied these accusations as well, saying that while the $5,000 debt part of the story is true, the gambling part is not. It was a heroin thing, and was taken care of in a completely legal fashion.)
Credit Suisse Case Shocker [NYP]
So last week we broke the story of layoffs at Credit Suisse. At the time we were hearing that as many as 400 people were going to be laid off. When Credit Suisse finally formally announced the job cuts the next day, they claimed they were only cutting 150 positions.
So it seemed like the initial information we had from insiders at Credit Suisse overstated the depth of the cuts. Until today.
Today the gnomes of Madison Park said that they are cutting an additional 170 fixed income positions.
Total job losses at Credit Suisse so far: 320. Just 80 more and our first report will be proven correct!
The story of job cuts at Credit Suisse are all over the wires today. The official body count is 150. The most serious carnage came in an unsurprising area of originating and processing residential mortgages. The same areas that Lehman and Bear Stearns cut back.
These aren’t considered “Wall Street” jobs by most folks in finance, and cuts those positions have been met with shrugs. If you’ve spent at least a couple of hours sober in the last two months, you probably knew mortgage origination was taking a haircut.
But at least some of those losing their jobs were New York based mortgage bond traders and sales staff, according to a Credit Suisse executive who spoke to the New York Post’s Roddy Boyd. This is the first time we’ve heard the credit crunch monster chewed up some actual traders.
Good news is that the actual number of job cuts seems to be far smaller than the rumored four hundred. The better news is that lines might be a bit shorter at the Shake Shack. Those bond trader boys can eat.
Credit Suisse’s A Bond Victim [New York Post]
