As we all know, Big Pharma is no stranger to the judicial system in this country. Every drug manufacturer has been a Defendant in at least one civil lawsuit. Most of them have been sued on many occasions. Roche, the Swiss drugmaker, has filed a civil lawsuit itself and is seeking $545 million in damages 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 collateralized debt obligations and auction rate securities. Roche alleges in its Complaint:
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 suit also names Eric Butler and Julian Tzolov, former Credit Suisse brokers, who were accused earlier this year of just such a “bait-and-switch” scheme. In those cases, Tzolov pleaded guilty to fraud charges and Butler was convicted of fraud.
Actually, Roche isn’t the only company that has sued over investments that turned out to be risky. Nor is it the only pharmaceutical company that lost money on auction rate securities (ARS). For example, Bristol-Myers Squibb took a $275 million charge early this year for ARS losses. Also, Teva Pharmaceutical Industries sued Merrill Lynch over ARS that dropped in value from $273 million to $10 million. It’s rather ironic to see drug manufacturers filing civil lawsuits alleging fraudulent conduct.
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