Three former Credit Suisse CEOs accused of excessive risk-taking -court filing By Reuters

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© Reuters. FILE PHOTO: Chief Govt Officer of Credit score Suisse, Thomas Gottstein, speaks through the fourth annual Future Funding Initiative in Riyadh, Saudi Arabia, January 27, 2021. REUTERS/Ahmed Yosri/File Picture

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ZURICH (Reuters) – A gaggle of Credit score Suisse AT1 bondholders has filed a category motion swimsuit accusing former executives on the Swiss financial institution, together with three previous chief CEOs, of being chargeable for the financial institution’s downfall.

A lawsuit filed in a New York court docket on Tuesday accused former bosses Thomas Gottstein, Tidjane Thiam and Brady Dougan, and several other different executives of doing excessively dangerous trades to realize excessive short-term returns and bonuses.

“Credit score Suisse’s administrators and senior executives, and the rotten tradition they instilled and fostered, destroyed belief within the financial institution, which led to its collapse,” the lawsuit mentioned.

The lawsuit additionally accused executives of “creating and perpetuating a tradition at Credit score Suisse that positioned earnings, extreme risk-taking, and self-dealing over sound danger administration and compliance with the regulation.”

As part of the collapsed financial institution’s takeover by its former rival UBS in March, Switzerland’s regulator determined to render round $18 billion of Credit score Suisse’s Extra Tier 1 (AT1) debt nugatory, which shocked markets and alerted litigators.

The deal upended a long-established apply of giving bondholders precedence over shareholders in a debt restoration, triggering a whole bunch of lawsuits.

Final month, Switzerland’s Federal Administrative Court docket mentioned it has acquired 230 claims towards the nation’s monetary regulator FINMA after it wrote off the worth of Credit score Suisse’s AT1 bonds.