Calyon Sues Mizuho Units Over Cash CDO Business

French investment bank Calyon on Thursday sued subsidiaries of Japan's Mizuho Financial Group, alleging an "illicit scheme" led to the mass resignation of Calyon's Cash CDO personnel, court documents showed.

Calyon's suit seeks $150 million in compensatory damages, and $600 million in punitive damages, according to the complaint.

It also seeks to enjoin Mizuho from soliciting, negotiating or consummating any collaterized debt obligation (CDO) transactions in the United States with any party that had been negotiating such a transaction with Calyon.

A Mizuho spokesman in the United States could not be reached for comment.

Calyon's complaint names 11 of its former employees, including former senior executives Douglas Munson and Alexander Rekeda. It said they abruptly resigned on Dec. 8, 2006 to accept employment that same day with Mizuho, Calyon's direct competitor and Japan's second largest bank.

Both Munson and Rekeda were in possession of confidential and proprietary business information, which they misappropriated after leading the exodus of employees working under them, according to the complaint filed with the United States District Court for the Southern District of New York.

Mizuho also succeeded in attracting clients the former Calyon employees had been charged with retaining on Calyon's behalf and further impaired Calyon's reputation by suggesting the French bank could no longer function after the loss of its employees.