Credit Suisse Group AG
- Company Name
- Credit Suisse Group AG
- Stock Symbol
- Class Period
- March 20, 2015 to February 3, 2016
- Motion Deadline
- February 20, 2018
- Southern District of New York
The complaint charges Credit Suisse and certain of its current and former officers with violations of the Securities Exchange Act of 1934. Credit Suisse is a multinational financial services holding company with one of its four primary divisions focused on investment banking. The Company is based in Switzerland with its principal U.S. offices in New York, New York.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose material adverse facts about the Company's business, operations and risk controls. Specifically, contrary to defendants’ repeated assurances that Credit Suisse maintained “comprehensive risk management processes and sophisticated control systems” in its investment operations, Credit Suisse's risk protocols and control systems were routinely disregarded, which allowed the Company to accumulate billions of dollars of risky, highly illiquid securities in violation of those risk protocols. Indeed, defendants’ scheme enabled the Company to surreptitiously accumulate $3 billion in distressed debt and U.S. collateralized loan obligations (“CLOs”), which were notoriously difficult to liquidate and required significant capital investments. This outsized, undisclosed investment violated Credit Suisse’s risk protocols and rendered it highly susceptible to losses when credit markets contracted. As a result of defendants’ false statements and/or omissions, Credit Suisse American Depositary Receipts (“ADRs”) traded at artificially inflated prices during the Class Period, reaching a high of close to $30 per share.
Then, by the beginning of 2016, with credit markets tightening, Credit Suisse could no longer hide the truth. On February 4, 2016, Credit Suisse announced its fourth quarter and fiscal year 2015 financial results, including a massive $633 million write-down from the sale of the Company’s outsized, illiquid and distressed debt and CLO positions, which would increase to nearly $1 billion in the following weeks. The Company’s recently appointed CEO, Tidjane Thiam, admitted that these risky investments were only allowed because the trading limits were continuously raised, enabling traders to take larger and larger positions in violation of Credit Suisse’s risk policies. In addition, Thiam acknowledged that the investment bank had acquired these securities over the years because it was “trying to generate revenue at all costs.” In reaction to this news, the price of Credit Suisse ADRs declined 11%, from a close of $16.69 per share on February 3, 2016 to a close of $14.89 per share on February 4, 2016.