Photographer: Stefan Wermuth / Bloomberg
Photographer: Stefan Wermuth / Bloomberg
Credit Suisse Group AG was sued by a small pension fund alleging that the bank deceived investors and allowed “high-risk customers”, including Greensill Capital i Archegos Capital Management takes too much leverage in one of the first lawsuits since the twin debacle.
The Michigan, City of St. Louis Pension Fund Clair Shores Police & Fire Retirement System, filed the lawsuit Friday in federal court in Manhattan, with the goal of representing all shareholders who bought U.S. deposit slips from Credit Suisse between Oct. 29 and March 31. .
The fund alleges that the bank “hid material flaws in the company’s risk policies and procedures and in compliance oversight functions and efforts to allow high-risk customers to adopt excessive leverage,” exposing the bank at “billions of dollars in losses.”
A Credit Suisse representative declined to comment on the lawsuit.
Greensill stood fighting for survival last month as investors cut ties for concerns about the solvency of its borrowers. Credit Suisse, citing concerns about its valuation, withdrew to end a $ 10 billion supply chain financing fund linked to financier Lex Greensill.
Read more: Credit Suisse Girds for Billions of Losses from Archegos Hit
The fall in Archegos, the family office of investor Bill Hwang, unfolded when some of his most important bets began to move against him, positions he had built with significant amounts of money borrowed. Archegos relied on this leverage to overload his returns, setting up Hwang for the financial disaster that befell him and ravaged the market.
When the banks that had extended the credit to Archegos saw Hwang’s bets turn south, they demanded that the firm provide more money to cover the decline. When it failed, they began liquidating Hwang’s portfolio, which included Chinese technology companies and U.S. media giants like ViacomCBS Inc. i Discovery Inc.
The defeat has caused billions of dollars in losses to some banks, in particular Credit Suisse and Nomura Holdings Inc. Others, included Goldman Sachs Group Inc., came out soon.
Read more: God and Man Collide on Bill Hwang’s Dueling Lives on Wall Street
The case is City of St. Clair Shores Police & Fire Retirement System v. Credit Suisse Group AG, 21-cv-03385, U.S. District Court, Southern District of New York (Manhattan).
– With the assistance of Sridhar Natarajan, Hema Parmar, Joe Schneider and Sally Bakewell
(Add details and context from the second paragraph.)