Credit Suisse settles U.S. shareholder lawsuitPosted On: Sep. 19, 2022 10:57 AM CST
(Reuters) — Credit Suisse Group reached a $32.5 million settlement to resolve a lawsuit accusing the Swiss bank of misleading shareholders about how well it managed risk, including its exposure to “high-risk” clients such as Archegos Capital Management.
A preliminary settlement of the proposed class action was filed on Friday with the U.S. District Court in Manhattan. It requires a judge's approval.
The bank was accused of playing “a kind of high-finance game of Russian roulette” by letting hedge funds and other “prime” customers make risky, multibillion-dollar bets with its credit, despite publicly pledging a “core commitment” to managing its risk limits, risk oversight and credit exposure.
Credit Suisse's "laissez-faire" approach led to at least $5.5 billion of losses, including from the collapses of Archegos and British financier Greensill Capital, causing shareholders to lose money as the price of its American depositary shares fell, court papers alleged.
The bank denied wrongdoing in agreeing to settle. It said in a statement that it was pleased to resolve the lawsuit.
Credit Suisse has dubbed 2022 a “transition” year as it reduces risk-taking and installed restructuring expert Ulrich Koerner as CEO.
Archegos’ collapse caused about $10 billion of losses at banks and wiped out more than $100 billion of shareholder value.
Friday's settlement covers ADR investors from Oct. 29, 2020, to March 31, 2021.
The lead plaintiff is the Sheet Metal Workers Pension Plan of Northern California. Its lawyers plan to seek up to 27.5% of the settlement amount, or about $8.9 million, for legal fees.