Jonathan Stempel
NEW YORK (Reuters) – Dozens of former officials of Credit Suisse and auditor KPMG have won a lawsuit by U.S. shareholders alleging they allowed 20 years of “sustained mismanagement” that led to the collapse of the Swiss bank and its takeover by UBS.
In a 92-page decision released Thursday, U.S. District Judge Colleen McMahon in Manhattan said allegations that the defendants wrongfully “ripped off” Credit Suisse did not support the racketeering allegations in the proposed class action.
She also rejected the claim brought under Swiss law, saying it was best heard in Swiss courts.
The defendants included 29 former executives and directors of Credit Suisse and four Credit Suisse divisions, as well as KPMG and 11 individuals.
Shareholders, led by Gregory Stevenson and Nicole Lawton-Bowles, said Credit Suisse’s “corrupt culture” and materially weak internal controls had led to an “endless string” of scandals and investigations, as well as more than $30 billion in losses, write-offs and regulatory fines. dollars.
They said the misconduct caused the price of Credit Suisse’s American depositary shares to fall from $33.84 in 2013 to $2.01 on March 17, 2023, the last trading day before UBS agreed to buy Credit Suisse in a fire sale worth $3 billion
KPMG was accused of “active complicity” because its New York offices were “almost part” of nearby Credit Suisse offices before PricewaterhouseCoopers became the bank’s auditor in 2020.
But the judge said allegations that mismanagement caused the stock price to fall could not be brought forward in a civil suit under federal racketeering laws. “These claims belong to the corporation, not its shareholders,” she said.
Lawyers for the shareholders did not immediately respond to requests for comment. UBS declined to comment. KPMG, its lawyers and lawyers for the Credit Suisse defendants did not immediately respond to requests for comment.
Numerous lawsuits have been filed in the US and Switzerland in connection with the closure of Credit Suisse.
These included claims on behalf of bondholders worth about 16 billion Swiss francs ($18.2 billion), which Swiss regulators unexpectedly wrote down to zero.
The cases are Stevenson v. Thornburgh et al., U.S. District Court, Southern District of New York, No. 23-04458, and Lawton-Bowles v. Thornburgh et al., same court, No. 23-04813.