In the News

“Credit Suisse Must Face Lawsuit over U.S. ‘Volatility’ Crash,” Reuters

April 27, 2021

A U.S. appeals court on Tuesday revived a lawsuit accusing Credit Suisse Group AG of causing huge losses by defrauding investors in a complex product for betting on stock market swings that lost 96% of its value in a single day.

The 2nd U.S. Circuit Court of Appeals in Manhattan said investors could try to prove Credit Suisse intended to collapse the market for its VelocityShares Daily Inverse VIX Short-Term Exchange-Traded Notes (“XIV Notes”) through just 15 minutes of its own trading of futures contracts.

Set Capital LLC and other investors in the proposed class action claimed they lost $1.8 billion, while the Swiss bank reaped at least $475 million in profit at their expense.

. . . 

XIV notes imploded on Feb. 5, 2018, when the Standard & Poor’s 500 dropped 4.1% and unexpected market turbulence punished investors betting on low volatility.

Circuit Judge John Walker said investors could pursue claims that Credit Suisse manipulated the market for the notes while downplaying the risks in offering documents.

“The complaint plausibly alleges both motive and opportunity to commit a manipulative act, as well as strong circumstantial evidence of conscious misbehavior or recklessness,” he wrote.

Michael Eisenkraft, the investors’ lawyer, said: “We look forward to prosecuting these claims vigorously.”

The complete article can be viewed here.