February 20, 2019

A U.S. judge has rejected Credit Suisse Group AG’s bid to dismiss a lawsuit accusing the Swiss bank of defrauding shareholders about its risk appetite and risk management before taking $1 billion of writedowns on souring debt.

The decision by U.S. District Judge Lorna Schofield in Manhattan was made public on Wednesday.

Schofield said investors who lost money in Credit Suisse’s American depositary receipts could pursue claims that the bank, Chief Executive Tidjane Thiam and other defendants intended to mislead them, by touting its “comprehensive” risk controls and “binding” limits on its exposure to risky and illiquid debt.

Credit Suisse took two writedowns in early 2016 on $4.3 billion of collateralized loan obligations and distressed debt, contributing to its first full-year loss since the 2008 global financial crisis.

The bank’s share price fell 11 percent after news of the first writedown. Other defendants included Chief Financial Officer David Mathers, and Thiam’s predecessor Brady Dougan.

The case is City of Birmingham Firemen’s and Policemen’s Supplemental Pension System v Credit Suisse Group AG et al, U.S. District Court, Southern District of New York, No. 17-10014. Cohen Milstein Sellers & Toll PLLC and Saxena White P.A. serve as co-lead counsel for the plaintiffs.

The complete article can be accessed here.