Get 40% Off
🤑 This hedge fund gained 26.16% in the last month. Get their top stocks with our free stock ideas tool.See stock ideas

Three former Credit Suisse CEOs blamed for excessive risk-taking in bondholder suit

Published 22/06/2023, 07:37
© Reuters. FILE PHOTO: Chief Executive Officer of Credit Suisse, Thomas Gottstein, speaks during the fourth annual Future Investment Initiative in Riyadh, Saudi Arabia, January 27, 2021. REUTERS/Ahmed Yosri/File Photo
CSGN
-

ZURICH (Reuters) -A group of Credit Suisse (SIX:CSGN) AT1 bondholders has filed a class action suit accusing former executives at the Swiss bank, including three past CEOs, of being responsible for the bank's downfall.

A lawsuit filed in a New York court on Tuesday accused former bosses Thomas Gottstein, Tidjane Thiam and Brady Dougan, and several other executives of doing excessively risky trades to achieve high short-term returns and bonuses.

"Credit Suisse’s directors and senior executives, and the rotten culture they instilled and fostered, destroyed trust in the bank, which led to its collapse," the lawsuit said.

The lawsuit also accused executives of "creating and perpetuating a culture at Credit Suisse that placed profits, excessive risk-taking, and self-dealing over sound risk management and compliance with the law."

It did not specify the amount of compensatory damages the plaintiffs were seeking.

UBS, which earlier this month became Credit Suisse's new owner following a government-engineered rescue in March, said it would not comment on the court case.

Representatives of Exos Financial, a financial firm founded and led by Dougan, did not immediately respond to an e-mail seeking comment, while the two other former chief executives could not be immediately reached for comment.

As a part of Credit Suisse's rescue, Switzerland's regulator decided to render around $18 billion of Credit Suisse's Additional Tier 1 (AT1) debt worthless, which stunned markets and alerted litigators.

The deal upended a long-established practice of giving bondholders priority over shareholders in a debt recovery, triggering hundreds of lawsuits.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Last month, Switzerland’s Federal Administrative Court said it has received 230 claims against the country’s financial regulator FINMA after it wrote off the value of Credit Suisse’s AT1 bonds.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.