District Court, Southern District of New York, No. The case is City of Birmingham Firemen’s and Policemen’s Supplemental Pension System v Credit Suisse Group AG et al, U.S. The defendants had said there was no fraud or intent to defraud, and that prior courts had found no liability for similar actions by other banks and corporate officers. Schofield said statements such as these could suggest that investors “were lulled into believing that the risk levels were contained and acceptable.” “Thiam stated to the Wall Street Journal, ‘A limit that keeps moving is not a limit.’” “Thiam himself stated that continually raising the internal risk limits led to larger exposures to illiquid CLO and distressed debt investments and resulted in the writedowns,” Schofield wrote. Since becoming chief executive in 2015, Thiam has repositioned Credit Suisse as a bank for ultra-wealthy and entrepreneurial customers, while shrinking its investment bank.īut the judge cited Thiam’s own statements about the bank’s rising risk appetite in explaining why the case should proceed. Shares of Credit Suisse declined as much as 12 percent in Zurich trading on Thursday as the bank posted the loss of 5. Their lawyers did not immediately respond to requests for comment. A greater emphasis on wealth management failed to bolster Credit Suisse’s results as turbulent markets and a substantial charge associated with its restructuring led to a loss of billions of dollars in the fourth quarter. The lead plaintiffs are four pension and retirement plans in suburbs of New York City and Chicago, and in Birmingham, Alabama. Credit Suisse said in a statement it was pleased with the dismissals, and had “strong legal and factual defenses to the remaining allegations.”Ī lawyer for the individual defendants did not immediately respond to requests for comment. Schofield dismissed some claims in the lawsuit. Other defendants included Chief Financial Officer David Mathers, and Thiam’s predecessor Brady Dougan. The bank’s share price fell 11 percent after news of the first writedown. Schofield said investors who lost money in Credit Suisse’s American depositary receipts could pursue claims that the bank, Chief Executive Tidjane Thiam and other defendants intended to mislead them, by touting its “comprehensive” risk controls and “binding” limits on its exposure to risky and illiquid debt.Ĭredit Suisse took two writedowns in early 2016 on $4.3 billion of collateralized loan obligations and distressed debt, contributing to its first full-year loss since the 2008 global financial crisis. Credit Suisse last week said the Archegos writedown would push the bank to a 960m loss in the first three months of the year, even after it had enjoyed its strongest underlying quarter for a. District Judge Lorna Schofield in Manhattan was made public on Wednesday. judge has rejected Credit Suisse Group AG’s bid to dismiss a lawsuit accusing the Swiss bank of defrauding shareholders about its risk appetite and risk management before taking $1 billion of writedowns on souring debt.
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