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Credit Suisse settles U.S. shareholder lawsuit over risk exposure, Archegos

The logo of Swiss bank Credit Suisse sometimes appears at an workplace in Zurich, Switzerland September 2, 2022. REUTERS/Arnd Wiegmann

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NY, Sept 16 (Reuters) – Credit Suisse Group AG (CSGN.S) reached a $32.5 million settlement to solve case accusing the Swiss bank of misleading shareholders about how exactly well it managed risk, including its contact with “high-risk” clients such as for example Archegos Capital Management.

An initial settlement of the proposed class action was filed on Friday with the U.S. District Court in Manhattan, and takes a judge’s approval.

The lender was accused of playing “some sort of high-finance game of Russian roulette” by letting hedge funds along with other “prime” customers make risky, multi-billion dollar bets using its credit, despite publicly pledging a “core commitment” to managing its risk limits, risk oversight and credit exposure.

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Credit Suisse’s “laissez-faire” approach resulted in at the very least $5.5 billion of losses, including from the collapses of Archegos and British financier Greensill Capital, causing shareholders to reduce money because the price of its American depositary shares fell, court papers alleged.

The lender denied wrongdoing in agreeing to stay. It said in a statement that it had been very happy to resolve the lawsuit.

Credit Suisse has dubbed 2022 a “transition” year since it reduces risk-taking, and installed restructuring expert Ulrich Koerner as leader. read more

Archegos’ collapse caused about $10 billion of losses at banks and destroyed a lot more than $100 billion of shareholder value.

Friday’s settlement covers ADR investors from Oct. 29, 2020 to March 31, 2021.

The lead plaintiff may be the Sheet Metal Workers Pension Plan of Northern California. Its lawyers intend to seek around 27.5% of the settlement amount, or around $8.9 million, for legal fees.

The case is City of St. Clair Shores Police & Fire Retirement System v Credit Suisse Group AG, U.S. District Court, Southern District of NY, No. 21-03385.

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Reporting by Jonathan Stempel in NY; Editing by Daniel Wallis and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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