By Jonathan Stempel

NEW YORK (Reuters) – Credit Suisse Group AG 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, and 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, multi-billion 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 chief executive.

Archegos’ collapse caused about $10 billion of losses at banks and wiped out more than $100 billion of shareholder value.

The lawsuit was led by a Michigan pension fund, the City of St. Clair Shores Police & Fire Retirement System.

Its lawyers plan to seek up to 27.5% of the settlement amount, or about $8.9 million, for legal fees.

The case is City of St. Clair Shores Police & Fire Retirement System v Credit Suisse Group AG, U.S. District Court, Southern District of New York, No. 21-03385.

(Reporting by Jonathan Stempel in New York; Editing by Daniel Wallis)