Credit Suisse settles US shareholder case over exposure, Archegos

Credit Suisse settles US shareholder case over exposure, Archegos

By Jonathan Stemple

NEW YORK (Reuters) – Credit Suisse Group has reached a $32.5 million settlement to resolve a lawsuit accusing the Swiss bank of misleading shareholders about how well it manages risk, including its exposure to “high-risk” clients such as Archegos Capital Management.

An initial settlement of the proposed class action was filed Friday with the US District Court in Manhattan, and requires a judge’s approval.

The bank has been accused of playing a β€œkind of highly-funded Russian roulette” by allowing hedge funds and other β€œmajor” clients to make risky bets on billions of dollars through its credit, despite publicly making a β€œcore commitment” to manage its own risk limits, oversee risks and risks credit.

Court papers alleged that Credit Suisse’s “laissez-faire” approach resulted in at least $5.5 billion in losses, including from the collapse of Archegos and British financier Greensell Capital, causing shareholders to lose money as the price of US trust shares plummeted.

The bank denied any wrongdoing in agreeing to the settlement. She said in a statement that she was pleased with the resolution of the case.

Credit Suisse called 2022 a “transitional” year because it reduces risk, and has appointed restructuring expert Ulrich Koerner as CEO.

The collapse of Archegos caused an estimated $10 billion in losses to banks and wiped out more than $100 billion from shareholder value.

Friday’s settlement covers ADR investors from October 29, 2020 to March 31, 2021.

The lead plaintiff is the Northern California Sheet Metal Workers Retirement Plan. Her attorneys plan to demand up to 27.5% of the settlement amount, or about $8.9 million, for legal fees.

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The case is City of St. Clair Shores Police & Fire Retirement System v Credit Suisse Group AG, US District Court, Southern District of New York, No. 21-03385.

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