Credit Suisse, the troubled Swiss bank, is facing legal action from US investors who claim it overstated its prospects ahead of this week’s share crash. Rosen Law Firm, a class action lawsuit specialist, lodged a complaint in a New Jersey court, alleging that the bank made “materially false and misleading statements” in its 2021 annual report. The action represents the first such suit mounted against Credit Suisse since its shares rapidly devalued, with a plunge of up to 30% on Wednesday, after its largest shareholder, Saudi National Bank, said it was unable to inject more cash due to regulatory restrictions. Shares rallied after a £44.5bn lifeline was offered by the Swiss central bank.
Credit Suisse admitted last week that it had “material weaknesses” in its reporting and controls procedures, which could have resulted in “misstatements” of financial results, when it published its delayed 2022 annual report. This followed multiple scandals over the past decade involving allegations of corporate espionage, misconduct, money laundering, sanctions busting and tax evasion. Clients have pulled their cash out of the bank in the wake of these episodes, contributing to losses that ballooned to 7.3bn Swiss francs (£6.5bn) in 2022.
The share crash followed the collapse of Silicon Valley Bank last week, and wider concerns over the global banking sector. Several major banks, including Bank of America, Goldman Sachs and JP Morgan, are depositing $30bn in First Republic, a troubled mid-sized bank that has been hit by customers withdrawing funds since the collapse of SVB. Credit Suisse has been trying to draw a line under these issues, with a spokesman stating that it is committed to strengthening its risk management, control and compliance functions.
Credit Suisse’s Asia Pacific equities business has been hit by several senior departures. Nick Silver, co-head of equities for the region, is moving to BNP Paribas. Meanwhile, Chris Prasertsintanah, head of equities for South Asia, and Jonathan Jenkins, head of equity sales for the region, are also leaving. The bank declined to comment on the lawsuit.
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