daniel chigunwe
A group of Credit Suisse 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 (UBSG.S), 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 US$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.
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. — Reuters.
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