{"id":18691,"date":"2023-04-21T20:22:22","date_gmt":"2023-04-21T20:22:22","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/credit-suisse-bondholders-sue\/"},"modified":"2023-04-21T20:23:49","modified_gmt":"2023-04-21T20:23:49","slug":"credit-suisse-bondholders-sue","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/credit-suisse-bondholders-sue\/","title":{"rendered":"Credit Suisse bondholders sue Swiss regulator over wipe-out"},"content":{"rendered":"

By Kirstin Ridley, Jahnavi Nidumolu and John Revill<\/p>\n

LONDON (Reuters) -Investors representing more than 4.5 billion Swiss francs ($5 billion) of Credit Suisse bonds have sued the Swiss regulator after their investments were wiped out during last month’s government-orchestrated rescue.<\/p>\n

Law firm Quinn Emanuel Urquhart & Sullivan, which is representing the bondholders, said on Friday the move was the first step in a battle to seek redress for clients whose assets it said had been expropriated during Credit Suisse’s takeover by bigger rival UBS.<\/p>\n

It is the first major lawsuit in the public domain over the Swiss decision to render around $18 billion of Credit Suisse’s Additional Tier 1 (AT1) debt worthless during the 3 billion Swiss franc all-share rescue deal last month, which stunned markets and alerted litigators.<\/p>\n

“We are committed to rectifying this decision, which is not only in the interests of our clients but will also strengthen Switzerland’s position as a key jurisdiction in the global financial system,” said Thomas Werlen, Quinn Emanuel’s Swiss managing partner.<\/p>\n

Swiss regulator FINMA (Financial Market Supervisory Authority), which made the write-down order during weekend crisis talks in March after a slump in the value of shares and bonds intensified fears about a global banking crisis, declined to comment. Credit Suisse also declined to comment.<\/p>\n

Peter Viktor Kunz, a professor of business law at the University of Bern, said it would be a disaster for FINMA and Switzerland’s reputation as a financial centre if the regulator lost the case.<\/p>\n

“The reputation of the country as a stable place for investors is on the line,” he said.<\/p>\n

The case was filed on April 18 in the Federal Administrative Court in St Gallen, north east Switzerland.<\/p>\n

‘VIABILITY EVENT’<\/p>\n

FINMA said last month that its decision to impose steep losses on some bondholders was legally watertight because the bond prospectuses and emergency government legislation allowed for a total write-down in a “viability event”.<\/p>\n

Engineered in the wake of the global financial crisis, AT1 bonds were designed to ensure investors, not taxpayers, carry the burden of risk if a bank runs into trouble.<\/p>\n

Bondholders have been seeking legal advice since the rescue upended a long-established practice of prioritising bondholders over shareholders in a debt recovery, and a number of claims have already been filed in Switzerland over the terms of the deal.<\/p>\n

The Federal Administrative Court said it was still receiving complaints, but declined to name claimants or comment on how many had been lodged by bondholders or their lawyers.<\/p>\n

Some investors have been trading the notes at penny prices in a so-called litigation play, betting that successful legal claims will boost values in the future, lawyers have said.<\/p>\n

($1 = 0.8941 Swiss francs) <\/p>\n

(Additional reporting by Jyoti Narayan in Begaluru; Editing by Savio D’Souza, Alexander Smith and Jan Harvey)<\/p>\n

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By Kirstin Ridley, Jahnavi Nidumolu and John Revill LONDON (Reuters) -Investors representing more than 4.5 billion Swiss francs ($5 billion) of Credit Suisse bonds have sued the Swiss regulator after their investments were wiped out during last month’s government-orchestrated rescue. Law firm Quinn Emanuel Urquhart & Sullivan, which is representing the bondholders, said on Friday […]<\/p>\n","protected":false},"author":8,"featured_media":18692,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[1213],"tags":[1223],"class_list":["post-18691","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-u-s-business","tag-updated"],"jetpack_featured_media_url":"http:\/\/lynettelockhart.com\/client\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2023binary_LYNXMPEJ3K043-VIEWIMAGE.jpg","_links":{"self":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/18691","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/comments?post=18691"}],"version-history":[{"count":4,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/18691\/revisions"}],"predecessor-version":[{"id":19168,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/18691\/revisions\/19168"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media\/18692"}],"wp:attachment":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media?parent=18691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/categories?post=18691"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/tags?post=18691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}