After an outside review of more than $5 billion losses with Archegos, the Swiss bank is reportedly weighing legal action against the family office-hedge fund.
Zurich-based Credit Suisse believes it has enough of a case to bring legal action against its erstwhile client: CEO Thomas Gottstein said the Swiss bank had «legitimate claims against Archegos — this is the basis on which we are acting,» in comments to the «Financial Times» (behind paywall) on Thursday.
This follows an excoriating litany of its own failings in an 172-page review of its business with Archegos prepared by Paul, Weiss, Rifkind, Wharton & Garrison and released publicly on Thursday. The law firm found it «likely that Archegos deceived CS and obfuscated the true extent of its positions, which Archegos amassed in the midst of an unprecedented global pandemic.»
Blood from a Stone?
The law firm said Credit Suisse had more than enough information before Archegos blew up late in March to protect itself from the fallout. The incident led Credit Suisse to dismiss nine people and otherwise censure 14 more – including clawing back $70 million in bonuses already paid out.
The key question for Credit Suisse is – much like with Greensill – what is still available to lay claim to. Led by ex-Tiger Cub hedge fund manager Bill Hwang, Archegos collapsed spectacularly and quickly late in March after steeping itself in leverage – with the help of Credit Suisse and other prime brokers – on stocks like ViacomCBS and Tencent.
