The proposed class action accuses Credit Suisse of deceiving investors by failing to disclose that it was suffering from “significant” customer outflows, and that it had material weaknesses in its internal controls over financial reporting.
US shareholders of Credit Suisse Group AG sued the Swiss bank on Thursday, claiming that the bank defrauded them by concealing problems with its finances.
The proposed class action accuses Credit Suisse of deceiving investors by failing to disclose that it was suffering from “significant” customer outflows, and that it had material weaknesses in its internal controls over financial reporting.
Shareholders led by Braden Turner said that as the truth became known, and Credit Suisse’s largest shareholder said it would not put more money into the bank, investors fled, causing losses as Credit Suisse’s stock price sank to a record low.
The lawsuit appears to be the first by US investors over recent problems at Credit Suisse, which regained some market confidence on Thursday after securing a lifeline to borrow up to $54 billion from Switzerland’s central bank.
Credit Suisse declined to comment on the lawsuit, which was filed in federal court in Camden, New Jersey. Chief Executive Ulrich Koerner and Chair Axel Lehmann are among the other defendants.
Turner, the named plaintiff, sued on behalf of holders of Credit Suisse’s American depositary shares from March 10, 2022, to March 15, 2023.
The law firm representing Turner was also first to file shareholder lawsuits against Silicon Valley Bank parent SVB Financial Group and Signature Bank. Regulators seized both of those banks within the last week.
Credit Suisse’s largest shareholder is Saudi National Bank. The Saudi bank’s chairman said in a TV interview on Wednesday that regulatory issues were the main reason it would not add to its 9.9% Credit Suisse stake.
The case is Turner v Credit Suisse Group AG et al, US District Court, District of New Jersey, No. 23-01476.
Credit Suisse on Thursday said it would borrow up to $54 billion from the Swiss central bank to shore up its liquidity and investor confidence after a slump in its shares intensified fears about a global financial crisis.
The Swiss bank’s announcement helped stem heavy selling in financial markets in Asian morning trade on Thursday, following torrid sessions in Europe and the United States overnight as investors fretted about a run on global bank deposits.
In its statement early Thursday, Credit Suisse said it would exercise its option to borrow from the Swiss National Bank up to 50 billion Swiss francs ($54 billion). That followed assurances from authorities in the private banking hub on Wednesday that Credit Suisse met “the capital and liquidity requirements imposed on systemically important banks” and that it could access central bank liquidity if needed.
Credit Suisse is the first major global bank to be given such a lifeline since the 2008 financial crisis – though central banks have extended liquidity more generally to banks during times of market stress including the coronavirus pandemic.
Asian stocks were hit by Wall Street’s tumble on Thursday and investors bought gold, bonds and the dollar. While the bank’s announcement helped trim some of those losses, trade was volatile and sentiment fragile.