Credit Suisse sued by US shareholders amid banking turmoil

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Switzerland’s second-biggest bank has been hit by its first lawsuit from US investors over its recent difficulties. They allege that Credit Suisse defrauded them by concealing problems with its finances.

Credit Suisse suffered a 30% drop in its share price on Wednesday, prompting the Swiss National Bank to offer it a CHF50 billion ($54 billion) lifeline. 

+ Credit Suisse rescue: What does it mean for Switzerland?

The proposed class action lawsuit filed in a federal court in Camden, New Jersey, on Thursday accuses Credit Suisse of deceiving investors by failing to disclose that it was suffering from “significant” customer outflows, and that it had material weaknesses in its internal controls over financial reporting.

Shareholders led by Braden Turner said that as the truth became known, and Credit Suisse’s largest shareholder said it would not put more money into the bank, investors fled, causing losses as Credit Suisse’s stock price sank to a record low.

+ Where did it all go wrong for Credit Suisse?

Credit Suisse is to borrow up to CHF50 billion from the Swiss central bank to bolster liquidity and reassure investors after its shares slumped on fears of contagion from a banking crisis in the United States.

The Zurich-based bank, with deep roots in Swiss business and society, is in the middle of a restructuring to rebuild after a string of scandals, losses and management upheavals.

+ Credit Suisse to borrow up to CHF50 billion from Swiss National Bank

Credit Suisse declined to comment on the US class action suit. 

Turner, the named plaintiff, sued on behalf of holders of Credit Suisse’s American depositary shares from March 10, 2022, to March 15, 2023. The law firm representing Turner was also first to file shareholder lawsuits against US-based banks Silicon Valley Bank parent SVB Financial Group and Signature Bank. US regulators seized both of those banks within the last week.