Big Pharma has plenty of its own problems. So why should it have to deal with banking fraud, too? Such is Roche's lament, in a lawsuit the Swiss drugmaker filed against Credit Suisse. Two former directors at the bank--who were later charged with fraud--invested Roche's cash in $545 million worth of the now-notorious CDOs and ARS's. (That's collateralized debt obligations and auction rate securities, of course.)
And now Roche wants satisfaction. "Credit Suisse fraudulently invested over $545 million of Roche's cash in CDOs and other ARS collateralized by subprime mortgages... and other risky collateral, rather than in federally guaranteed student loan securities as represented," the company alleges.
The suit names former Credit Suisse brokers Eric Butler and Julian Tzolov, who were accused earlier this year of just such a "bait-and-switch" scheme. Tzolov pleaded guilty to fraud charges, and Butler was convicted of fraud.
Roche isn't the only company that has sued over investments that turned out to be risky. Nor is it the only pharma that lost money on auction rate securities. Bristol-Myers Squibb took a $275 million charge early this year for ARS losses, and Teva Pharmaceutical Industries sued Merrill Lynch over ARS's that dropped in value to $10 million from $273 million.