Jonathan Stempel
NEW YORK (Reuters) – Credit Suisse Group AG reached a $32.5 million settlement to resolve a lawsuit that accused the Swiss bank of misleading shareholders about how well it managed risks, including exposure to “high-risk” clients , such as Archegos Capital Management.
A preliminary settlement of the proposed class action was filed Friday in 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 allowing hedge funds and other “prime” clients to make risky multibillion-dollar bets on its credit despite a public promise of 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 in losses, including from the collapse of Archegos and British financier Greensill Capital, which saw shareholders lose money when the value of U.S. depository shares fell, court filings say .
The bank denied guilt in agreeing to the settlement. The statement said he was pleased to settle the lawsuit.
Credit Suisse called 2022 a “transitional” year as it reduces risk and appointed restructuring expert Ulrich Koerner as chief executive.
Archegos’ collapse caused about $10 billion in bank losses and wiped out more than $100 billion in shareholder value.
Friday’s deal applies to ADR investors from October 29, 2020 to March 31, 2021.
The lead plaintiff is the Sheet Metal Workers Retirement Plan of Northern California. His lawyers plan to seek up to 27.5% of the settlement, or about $8.9 million, in legal fees.
In case: City of St. Clair Shores Police and 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 and Cynthia Osterman)
