Ace shareholders are suing Credit Suisse for making false and misleading public statements and downplaying the impact of its losses, the latest knock on the beleaguered bank.
Rosen Law Firm, a global investor rights law firm, filed a class action lawsuit in New Jersey against the Swiss banking giant on behalf of investors.
It comes in the same week that the lender agreed to borrow up to 50 billion Swiss francs (£45 billion) from the Swiss National Bank, after seeing its share price fall by almost 30% on Wednesday.
The lawsuit accuses Credit Suisse of making false and misleading public statements and failing to disclose critical information about the amounts of customers withdrawing money from the bank at the end of last year.
Accordingly, Credit Suisse had underestimated the impact of the company’s recent series of quarterly losses and compliance failures on risk and liquidity and its ability to retain customer funds.
The bank did not disclose “the sharp increase in customer outflows that Credit Suisse began to experience in October 2022”, the lawsuit read.
It continued: “Accordingly, Credit Suisse had downplayed the impact of the company’s recent series of quarterly losses and compliance failures on risk and liquidity and its ability to retain customer funds.”
On Tuesday, Credit Suisse admitted in its annual report that it had found “material weaknesses” in its internal controls over financial reporting, meaning it had failed to identify risks.
As a result, it concluded at the end of last year that its disclosure controls and procedures were not effective.
The bank also revealed it maintained 123 million Swiss francs (£109 million) in asset outflows until 2022, as customers withdrew funds.
This helped reduce the group’s overall net loss for the year to 7.3 billion Swiss francs (£6.5 billion).
It acknowledged that it had suffered “reputational damage” from outflows of deposits and assets under management, which it insisted had been concentrated in October last year and had started to moderate since then.
But investors suing Credit Suisse accused it of exaggerating its financial position and prospects and downplaying the impact of the losses.
“As a result, the company’s public statements were materially false and misleading at all relevant times”, it concluded.
The law firm, which focuses on representing shareholders, said other investors may join the class action by contacting their attorneys.
Credit Suisse declined to comment on the lawsuit.
Rosen Law Firm filed a lawsuit against Silicon Valley Bank of America, which collapsed late last week, for misleading shareholders about the sensitivity of running the bank as a result of high interest rates.
It is also examining possible claims from shareholders of US regional bank First Republic Bank, whose share price fell by more than two-thirds during the day on Monday.
Credit: www.standard.co.uk /