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Credit Suisse Group AG (CSGN.S) is being sued by its U.S. shareholders, who allege that the Swiss bank hid issues with its financial status to defraud them. The class action lawsuit alleges that Credit Suisse did not reveal that it was experiencing substantial customer outflows and that it had weaknesses in its internal controls related to financial reporting, which misled investors.
On Wednesday, Credit Suisse Group AG's share price fell by 30%, prompting the central bank to offer it a £44.5 billion lifeline. While the shares recovered approximately 20% by Thursday's end in Zurich, a proposed class-action complaint was filed in federal court in Camden, New Jersey, alleging that the Swiss lender had deceived investors by failing to disclose significant customer outflows and material weaknesses in its internal controls over financial reporting. This lawsuit was filed by the Rosen Law Firm, which specializes in representing individual shareholders.
According to Credit Suisse's delayed 2022 annual report published last week, the company has material weaknesses in its reporting and controls procedures. Bank executives were stripped of bonuses in 2022 due to the bank's largest annual loss since 2008.
According to the report, Braden Turner is leading the group of shareholders proposing the class action. The shareholders claim that the truth about Credit Suisse's financial situation only became apparent when the bank's largest shareholder decided not to invest any more money and investors started to withdraw.
Since the Archegos Capital Management scandal, several global investment banks have come under scrutiny, including Credit Suisse, which has received financial assistance from the Swiss National Bank.
