(Reuters) - Hundreds of lawsuits have been filed over the terms of the emergency deal to save Credit Suisse (SIX:CSGN) by selling it to Swiss banking rival UBS, a Swiss court has said.
The 3 billion Swiss franc ($3.35 billion) rescue, hammered out over a March weekend amid turmoil in the global banking sector, upended a long-established practice of giving bondholders priority over shareholders in a debt recovery.
Around 16 billion Swiss francs of Additional Tier 1 (AT1) Credit Suisse debt was written down to zero in a move that shocked markets.
Law firms including Quinn Emanuel Urquhart & Sullivan and Pallas Partners have filed claims on behalf of investors.
Here is a snapshot of legal action, by jurisdiction.
SWITZERLAND * More than 1,000 investors representing around a third ofthe AT1 bonds are suing the Swiss regulator in a claim led byQuinn Emanuel. The litigation firm has partnered with five lawfirms in the U.S., Britain, Singapore, the Gulf CooperationCouncil and Switzerland. The case has been filed in the FederalAdministrative Court in St Gallen, northeast Switzerland. Theregulator, FINMA, has declined to comment. * A second group of investor representing a nominal $1.65billion of AT1 bonds has also filed a claim against FINMA,arguing the writedown was an arbitrary violation of propertyrights and in breach of Swiss constitutional and other legalprotections. The case, coordinated by Pallas Partners, includesmore than 90 global institutional investors and asset managersand more than 700 retail and family office clients, Pallas saidon May 2. * The Swiss Federal Administrative Court said in April ithad received "several hundreds" of claims against FINMA. It hasdeclined to name claimants.
UNITED STATES * One of the first proposed U.S. class actions againstCredit Suisse over alleged false or misleading statementspre-dates the rescue. In a case led by shareholder BradenTurner, investors alleged on March 16 that the bank failed todisclose it was suffering "significant" customer outflows andhad material weaknesses in internal controls over financialreporting. Credit Suisse declined to comment. * Similar proposed class actions have been filed on behalfof shareholders. * A proposed class action was filed in the district court ofNew Jersey on April 21 against Credit Suisse and five seniormanagers on behalf of investors who bought AT1 bonds and sharesin the U.S. between Feb. 18, 2021 and March 20, 2023. The caseseeks to recover damages caused by Credit Suisse's allegedviolations of federal securities laws for failing to disclosecustomer outflows and overstating its financial health.
SINGAPORE * Credit Suisse investors in Singapore are in talks to suethe Swiss government over the AT1 bond writedown on grounds itviolated a free trade agreement, the Financial Times reported.They argue the move breached protections against unfair stateactions under the Singapore-European Free Trade Associationsigned with Switzerland in 2003.
($1 = 0.8960 Swiss francs)