Lawsuits against Credit Suisse over the cancellation of CoCos affect former directors including Horta Osório

Core Capital Partners, an asset management firm based in the Bahamas, on October 20 filed a class action lawsuit in the Southern District Court of New York against the Swiss bank, Credit Suisse, which was absorbed by UBS in March.

The news was reported by Cinco Dias.

The lawsuit seeks at least $1.2 billion in damages and is directed against the bank and several of its former directors, including former presidents Axel P. Lehmann and Antonio Horta Osorio, as well as audit firm PricewaterhouseCoopers, for allegedly defrauding investors.

In June, it was reported that three former Credit Suisse CEOs, Thomas Gottstein, Tidjan Thiam, and Brady Duggan, along with other executives, were being sued by equity securities investors in a New York court for mismanagement. The alleged one. It led to the collapse of the bank.

The debate is about canceling the highly subordinated (AT1) debt issuance that recapitalized the bank as part of the integration with UBS.

As part of UBS’ takeover of Credit Suisse in March, the Swiss financial regulator decided to write down some CHF16.36 billion in AT1 bonds to zero, which surprised investors – by reversing the hierarchy of assets that respond to capital losses in the event. Of redemption.

These investors are now demanding compensation from the bank, its former leadership and PricewaterhouseCoopers for the losses they incurred with the consumption of 17 billion euros in “coconut” after the intervention in Credit Suisse.

The legal action, led by the director of the Bahamas-based company, Christian Quigg, shows that this amount corresponds to AT1 bonds acquired between February 18, 2021 and March 20, 2023 (when UBS acquired Credit Suisse). The value of which was reduced to zero by a decision of the Swiss authorities.

According to the document, consulted by CincoDías, the value of this instrument was decreasing, at the same time that the former officials of the institution continued to state in numerous public statements that the financial solvency of the institution was not in doubt and that the flight of clients was increasingly “stabilized.”

Plaintiffs allege those statements were “materially false and misleading” and were intended to “artificially” inflate the price.

According to the lawsuit, the annual financial statement report filed with the Securities and Exchange Commission (SEC) in March indicated that the situation was the opposite, as investor flight was increasing.

In the end, after the merger, the value of the bonds did not increase, on the contrary, as the Swiss Financial Market Supervisory Authority (Finma) decided to cancel the bonds.