Photographer: Stefan Wermuth / Bloomberg
Photographer: Stefan Wermuth / Bloomberg
Credit Suisse Group AG has been sued by a small pension fund that claims the bank misled investors and left “high-risk customers”, including Greensill Capital and Archegos Capital Management takes too much leverage in one of the first processes since the dismemberment of the twins.
Michigan Pension Fund, City of St. Clair Shores Police & Fire Retirement System filed a lawsuit in federal court in Manhattan on Friday, seeking to represent all shareholders who purchased U.S. Credit Suisse storage receipts 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 customers to assume excessive leverage”, exposing the bank to “billions of dollars in losses.” ”.
A Credit Suisse representative declined to comment on the process.
Greensill was allowed to fight for survival last month, while investors broke ties due to concerns about the solvency of its debtors. Credit Suisse, citing valuation issues, decided to liquidate a $ 10 billion pool of supply chain financing funds linked to financier Lex Greensill.
Read more: Credit Suisse Girds for billions in losses from Archegos Hit
The fall of Archegos, the family office of investor Bill Hwang, took place as some of his biggest bets began to move against him – positions he had built with large sums of money borrowed. Archegos relied on that leverage to overload its profits, preparing Hwang for the financial disaster that struck him and flew into the market.
When banks that had lent to Archegos saw Hwang’s bets heading south, they asked the company to allocate more money to cover the decline. When it failed, they began liquidating Hwang’s portfolio, which included Chinese technology companies and US media giants such as ViacomCBS Inc. and Discovery Inc.
The route has caused billions of dollars in losses to some banks, especially Credit Suisse and Nomura Holdings Inc. Others, inclusive 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, US District Court, Southern District of New York (Manhattan).
– With the assistance of Sridhar Natarajan, Hema Parmar, Joe Schneider and Sally Bakewell
(Add details and context starting with the second paragraph.)