Credit Suisse American Depositary Receipts

Period: 10/29/2020 to 03/31/2021
Lead Plaintiff Deadline: 06/15/2021

SUMMARY OF CASE:

A securities class action has been filed against Credit Suisse American Depositary Receipts (CS) on behalf of all persons who purchased or otherwise acquired Credit Suisse American Depositary Receipts between October 29, 2020 through March 31, 2021.  This case has been filed in the USDC – S.D.N.Y.

The Complaint alleges that the bank misled investors and let “high-risk clients” including Greensill Capital and Archegos Capital Management take on too much leverage, in one of the first lawsuits since the twin debacles.  Credit Suisse had “concealed material defects in the company’s risk policies and procedures and compliance oversight functions and efforts to allow high-risk clients to take on excessive leverage,” exposing the bank to “billions of dollars in losses.”

The meltdown at Archegos, the family office of investor Bill Hwang, unfolded as some of his biggest wagers started to move against him — positions he’d built with significant amounts of borrowed money. Archegos relied on that leverage to supercharge its returns, setting Hwang up for the financial disaster that befell him and roiled the market.

Archegos started out in 2013 with more than $200 million, a significant fortune but a modest sum in hedge fund terms. Within a decade, it had grown to some $20 billion, according to people who did business with Archegos, marking one of the fastest accumulations of private wealth in the history of modern finance.

Much of that stratospheric leap took place in the past year or two, as Hwang began to employ more and more leverage to boost his returns and as banks, eager for his lucrative trading business, obliged by extending him credit. Hwang, a name that few even on Wall Street had heard of until now, was suddenly worth more than Ray Dalio, Steve Cohen and David Tepper.

When the banks saw Hwang’s bets turn south, they required Archegos to put up more money to cover the decline. When it couldn’t, they began to liquidate his portfolio, which included Chinese technology companies and U.S. media giants such as ViacomCBS Inc. and Discovery Inc.

The rout has inflicted billions of dollars in losses on some of the banks, notably Credit Suisse and Nomura Holdings Inc. Others, including Goldman Sachs Group Inc. and Morgan Stanley, got out early.