Photographer: Stefan Wermuth / Bloomberg
Photographer: Stefan Wermuth / Bloomberg
Credit Suisse Group AG was sued by a small pension fund alleging that the bank had misled investors and Greensill Capital and Archegos Capital Management gains too much influence in one of the first lawsuits since the two debacles.
The Michigan pension fund, City of St. Clair Shores Police & Fire Retirement System, filed suit in federal court in Manhattan on Friday to represent all shareholders who purchased US certificates in Credit Suisse between October 29 and March 31.
The fund claims that the bank “hid material flaws in the company’s risk policies and procedures and compliance oversight functions and efforts to allow high-risk clients to engage in excessive leverage,” exposing the bank to “billions of dollars to losses “.
A representative for Credit Suisse declined to comment on the lawsuit.
Greensill fought for survival last month when investors cut ties over concerns about the creditworthiness of its borrowers. Credit Suisse, referring to valuation issues, decided to phase out a $ 10 billion pool of supply chain funding funds linked to financier Lex Greensill.
Read more: Credit Suisse takes billions in losses due to Archegos Hit
The collapse at Archegos, the family office of investor Bill Hwang, unfolded as some of his biggest bets began to move against him – positions he had built up with significant amounts of borrowed money. Archegos relied on that leverage to boost returns, preparing Hwang for the financial disaster that befell him and devastated the market.
When banks that provided Archegos credit saw Hwang’s bets heading south, they demanded the company put in more money to cover the decline. When that failed, they began liquidating Hwang’s portfolio, which included Chinese tech companies and US media giants such as ViacomCBS Inc. and From Discovery Inc.
The defeat caused billions of dollars in losses to some banks, most notably Credit Suisse and Nomura Holdings Inc. Others, including Goldman Sachs Group Inc., left early.
Read more: God and man collide in 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, US District Court, Southern District of New York (Manhattan).
– Assisted by Sridhar Natarajan, Hema Parmar, Joe Schneider and Sally Bakewell
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