BUSINESS Credit Suisse hit by US lawsuit over writedowns

BUSINESS

Credit Suisse hit by US lawsuit over writedowns

Reuters

08:15, February 12, 2018

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The logo of Swiss bank Credit Suisse is seen at a branch in Winterthur, Switzerland November 2, 2017. REUTERS/Arnd Wiegmann

Credit Suisse faces a U.S. class action lawsuit over $1 billion in writedowns it took in 2015 and 2016 linked to its trading division, Swiss newspaper SonntagsZeitung reported on Sunday, but the Swiss bank said the case was “without merit”.

Starting in 2015, newly named Credit Suisse Chief Executive Tidjane Thiam and his finance chief, David Mathers, were caught off guard by the scale of their trading division’s illiquid trades. They were forced to write down their value. 

Now, a class action lawsuit in New York accuses the bank, Thiam and Mathers of giving false and misleading information about risky investments that led to a drop in Credit Suisse’s share price, costing investors millions, the newspaper reported.

The plaintiffs in the case include the pension funds of fire departments and police departments in the U.S. city of Birmingham.

Asked by Reuters to comment on Sunday, Credit Suisse said in a statement: “The claim is unfounded and without merit.”

“In the last three years, Credit Suisse has analyzed these allegations and responded to information requests from supervisory bodies.  All regulatory reviews were closed without any action against Credit Suisse,” it said.

The bank has been in the news recently for legal challenges and inquiries linked to it or former employees.

On Friday, an ex-Credit Suisse wealth manager was sentenced to five years in jail for defrauding clients including former Georgian prime minister Bidzina Ivanishvili and Russian oligarch Vitaly Malkin.

Former U.S.-based brokers also accuse the bank of withholding up to $300 million of pay after their private banking unit was shuttered in 2015. The bank has said that lawsuit has no merit.

Additionally, Switzerland’s FINMA financial industry watchdog has contacted the Zurich-based bank after it decided to terminate a product linked to market volatility after its value plunged during a recent rout of global stock markets.

Credit Suisse releases 2017 figures on Wednesday.



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