The forced takeover of Credit Suisse left many losers among investors in its wake.
UBS paid 3 billion Swiss francs ($3.3 billion) for the takeover of Credit Suisse, less than half its market value, on the final trading day before the deal was closed. The agreement struck in March is already drawing claims for damages of around $9 billion, with more to come, according to a «Financial Times» (behind paywall) report Tuesday.
Weak Defense from Credit Suisse
New lawsuits are being filed, and plaintiffs are mobilizing on new fronts. British law firm Pallas is about to initiate proceedings against the combined entity in Switzerland related to Credit Suisse writing off mandatory convertible bonds (AT1s) worth nearly 16 billion francs in March.
Although Credit Suisse was ordered to do so by regulators, Pallas’s attorneys argue that it should have fought back. «The reasonable reaction for Credit Suisse – now UBS – would have been to challenge a direction to write down the AT1s,» a Pallas partner said.
Suing Switzerland
The law firm Quinn Emanuel, which already brought a complaint by AT-1 investors to the Federal Administrative Court in St.Gallen, is considering filing a lawsuit in the United States to sue Switzerland from there.
Foreign aggrieved parties can file an action before a court in their home country. It can then declare itself competent and rule on whether a domestic party has suffered damage due to foreign influence. The question is then whether such a judgment is enforceable in Switzerland.
Washington, DC, is the Next Stop
Several law firms are filing arbitration proceedings at the International Center for Settlement of Investment Disputes in Washington, DC. The arbitration institution is called upon when investors must defend themselves against government encroachments on their property abroad.
Switzerland has investment agreements with over 120 countries to protect local investors from such intrusions. The plaintiffs want to turn the tables and use them against Switzerland.
All this shows the legal contours of Credit Suisse’s emergency bailout is taking on a global dimension. In Switzerland, in addition to the complaint before the Federal Administrative Court, lawsuits have also been filed at the Commercial Court in Zurich. This is being done by Credit Suisse shareholders, who are fighting against the low purchase price that UBS paid for their shares.
