Bloomberg News

Credit Suisse Must Face $2 Billion National Century Notes Case

March 02, 2012

Credit Suisse Group AG (CSGN) must defend fraud claims by institutional investors who bought $2 billion in notes issued by the bankrupt health-care financer, National Century Financial Enterprises Inc., a judge ruled today.

The noteholders claim Credit Suisse, the placement agent, knew or should have known of the $2.9 billion fraud that led to National Century’s collapse in 2002. Ten executives of the Dublin, Ohio-based company were convicted of crimes, including former Chief Executive Officer Lance Poulsen, who is serving 30 years in prison.

Credit Suisse argued that it didn’t know of the fraud, which National Century hid, and that it didn’t mislead noteholders, according to today’s ruling by U.S. District Judge James Graham in Columbus, Ohio. Graham granted other parts of the bank’s motion to dismiss the case.

“Noteholders have submitted sufficient evidence in support of their fraud-based claims to create genuine issues of material fact,” Graham wrote in a 115-page decision.

Claims against the Zurich-based bank for negligent misrepresentation and aiding and abetting breach of fiduciary duty were dismissed by the judge.

“Credit Suisse will continue its defense of this decade- old case, and remains confident that a jury will find based on all the evidence that it should not be held responsible for assisting or committing any wrongdoing,” Steven Vames, a Credit Suisse spokesman, said in an e-mailed statement.

The case is In re National Century Financial Enterprises Inc. Investment Litigation, 03-md-01565, U.S. District Court, Southern District of Ohio (Columbus).

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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