Credit Suisse Shareholders Open Door To Lawsuits, Simultaneously Begin Filing Them
By their nature, annual meetings offer a company’s shareholders the opportunity to reflect on how that company is doing. That opportunity came for Credit Suisse’s shareholders on Friday. And as they surveyed all that has gone on in the past year—from Greensill to Archegos, spying scandals to other spying scandals, settlements and adverse judgments, (alleged) collusion and money laundering and bribery and market manipulation and more collusion, the police raids and suspicious document shredding, the sexism and incompetence, and the Alpine lakes full of red ink that resulted from all of the above and more—and they think, “Yea, we might want to sue the people in charge.”
In what is normally a routine vote to insulate bank officials from lawsuits, around 60% of voted shares went against Credit Suisse for discharging them from legal liability in 2020. The binding vote highlights investors’ deep dissatisfaction with scandal-prone Credit Suisse, including the more than $5 billion it lost from family office Archegos Capital Management’s soured stock positions.
And now that that’s settled, one of those shareholders presumably making up some of that 60% is going to make it official.
The Employees Retirement System for the City of Providence filed the complaint as a derivative action on behalf of all shareholders “to redress injuries that the corporation suffered and will suffer as a direct result” of the alleged failure of oversight, according to the suit. The Rhode Island fund seeks damages on behalf of the investors and a declaration that the defendants breached their fiduciary obligations to the Zurich-based bank…. Because of a “failure to adopt and implement basic modern risk management structures and processes, CS suffered $5.5 billion in losses due to Archegos alone, not to mention extensive harm to its reputation and goodwill,” the fund said, adding that the bank also failed in relation to lender Greensill Capital.
But, hey, the news wasn’t all bad: Credit Suisse won’t have to do some of Providence’s work for it.
The bank won a separate vote to avoid conducting a special audit into its handling of a financing partner, Greensill Capital. Greensill went bankrupt in March 2021, putting at risk billions of dollars in investments in funds Credit Suisse ran via an asset-management arm. Around 88% of voters didn’t support the proposal, which a Swiss foundation representing pension funds had submitted.
Credit Suisse Loses Shareholder Vote to Clear Executives of Liability [WSJ]
Credit Suisse’s Board Sued by Retirement Fund for Archegos Debacle [Bloomberg]
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