(Reuters) -Hundreds of lawsuits have been filed over the terms of an emergency deal to save Swiss lender Credit Suisse by selling it to its bigger rival UBS, a Swiss court has said.
The 3 billion Swiss franc ($3.35 billion) rescue, hammered out over a March weekend amid turmoil in the global banking sector, upended a long-established practice of giving bondholders priority over shareholders in a debt recovery.
Around 16 billion Swiss francs of Additional Tier 1 (AT1) Credit Suisse debt was written down to zero, in a shock to markets.
Law firms such as Quinn Emanuel Urquhart & Sullivan, Pallas Partners and Korein Tillery, are among those who have spoken to prospective bondholder clients about bringing claims.
Shareholders are also nursing losses.
Here is a snapshot of legal action, by jurisdiction.
SWITZERLAND
* A group of investors representing more than 4.5 billionSwiss francs of AT1 bonds sued the Swiss regulator in one of thelargest such bondholder disputes, their lawyers Quinn Emanuelsaid on April 21. The case was filed in the FederalAdministrative Court in St Gallen, northeast Switzerland. Theregulator, FINMA, declined to comment. * A group of investor representing a nominal $1.65 billionof AT1 bonds has also filed a claim against FINMA, arguing thewritedown was an arbitrary violation of property rights and inbreach of Swiss constitutional and other legal protections. Thecase, coordinated by law firm Pallas Partners, includes morethan 90 global institutional investors and asset managers andmore than 700 retail and family office clients, Pallas said onMay 2. * The Swiss Federal Administrative Court said in April ithad received “several hundred” claims against FINMA. It hasdeclined to name claimants.
UNITED STATES
* One of the first proposed U.S. class actions againstCredit Suisse over alleged false or misleading statementspre-dates the rescue. In a case led by shareholder BradenTurner, investors alleged on March 16 that the bank failed todisclose it was suffering “significant” customer outflows andhad material weaknesses in internal controls over financialreporting. Credit Suisse declined to comment. * Similar proposed class actions have been filed on behalfof shareholders. * A proposed class action was filed in the district court ofNew Jersey on April 21 against Credit Suisse and five seniormanagers on behalf of investors who bought AT1 bonds and sharesin the U.S. between Feb. 18, 2021 and March 20, 2023. The caseseeks to recover damages caused by Credit Suisse’s allegedviolations of federal securities laws for failing to disclosecustomer outflows and overstating its financial health.
SINGAPORE
* Credit Suisse investors in Singapore are in talks to suethe Swiss government over the AT1 bond writedown on grounds itviolated a free trade agreement, the Financial Times reported.They argue the move breached protections against unfair stateactions under the Singapore-European Free Trade Associationsigned with Switzerland in 2003.
($1 = 0.8960 Swiss francs)
(Reporting by Kirstin Ridley in London, John Revill in Zurich and Jonathan Stempel in New York; Editing by Alexander Smith, Josie Kao and Bernadette Baum)
