* Arizona, AllianceBernstein, Lloyds, MetLife, Pimco settle
* Credit Suisse reduces Q4 profit by 134 mln Swiss francs
By Katharina Bart and Nate Raymond
ZURICH/NEW YORK, March 14 Credit Suisse Group AG
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
and Allianz SE's Pimco unit, the plaintiffs'
lawyer, Kathy Patrick of Gibbs & Bruns, said in a phone
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 and MetLife Inc.
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."
Credit Suisse said the settlement will reduce its previously
reported fourth-quarter net profit by 134 million Swiss francs
($141 million), to 263 million Swiss francs from 397 million.
National Century had helped finance clinics and hospitals,
and bought accounts receivable with money it got through the
sale of notes, including notes that Credit Suisse helped sell.
But the U.S. Department of Justice said the Dublin,
Ohio-based company misused investor money, funneled corporate
funds to top executives, and lied to investors to hide its
Poulsen is serving a 30-year prison term following his 2008
conviction for fraud, conspiracy and money laundering. Several
other former National Century executives were also convicted of
Jury selection in the investor suit had been scheduled to
begin on March 28.
Credit Suisse in January lost its bid to be tried separately
from Poulsen, who is considered insolvent.
Noteholders had previously reached other settlements over
the collapse, including a 2006 accord with JPMorgan Chase & Co
"We have recovered $1 billion of losses for our clients,
when prior settlements are taken into account," Patrick said.
"This represents nearly 80 cents on the dollar."
The cases, all in the U.S. District Court, Southern District
of New York, are Crown Cork & Seal Co et al v. Credit Suisse
First Boston Corp et al, No. 12-05803; Arizona v. Credit Suisse
First Boston Corp et al, No. 12-05804; City of Chandler et al v.
Bank One NA et al, No. 12-05805; Lloyds TSB Bank Plc v. Bank One
NA et al, No. 12-07263; and Metropolitan Life Insurance Co et al
v. Bank One et al, No. 12-07264.