Photographer: Stefan Wermuth / Bloomberg
Photographer: Stefan Wermuth / Bloomberg
Credit Suisse Group AG has been sued by a small pension fund which claims that the bank is misleading investors and ‘high-risk customers’, including Greensill Capital en Archegos Capital Management is taking too much leverage in one of the first lawsuits since the twins.
The Pension Fund of Michigan, City of St. Clair Shores Police & Fire Retirement System, filed the case in federal court in Manhattan on Friday and wanted to represent all shareholders who bought Credit Suisse U.S. deposit receipts between October 29 and March 31.
The fund claims that the bank ‘concealed’ significant deficiencies in the company’s risk policies and procedures and the oversight functions and efforts to enable high-risk clients to hide excessive leverage, ‘exposing the bank to’ billions of dollars in losses ‘.
A representative of Credit Suisse declined to comment on the matter.
Greensill was made to fight for survival last month when investors severed ties over concerns about the creditworthiness of its borrowers. Credit Suisse, referring to valuation problems, linked a $ 10 billion group of supply chain financing funds linked to financier Lex Greensill.
Read more: Credit Suisse belts for 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 built up with substantial amounts of borrowed money. Archegos relied on leverage to increase its returns, and Hwang focused on the financial disaster that befell him and woke up the market.
When banks that granted credit to Archegos saw Hwang’s bets turn south, they asked the firm to invest more money to cover the decline. When that failed, they began liquidating Hwang’s portfolio, which included Chinese technology companies and US media giants such as ViacomCBS Inc. and Discovery Inc.
Some of the banks have inflicted billions of dollars in losses, most notably Credit Suisse and Nomura Holdings Inc. Others, including Goldman Sachs Group Inc., came out early.
Read more: God and Man clash 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, U.S. District Court, Southern District of New York (Manhattan).
– With the help of Sridhar Natarajan, Hema Parmar, Joe Schneider and Sally Bakewell
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