A small item in Credit Suisse's first-quarter financial report highlights a big problem.
Credit Suisse mentions additional legal proceedings related to Archegos in its first-quarter financial report released Thursday, including a recent lawsuit filed with New York Supreme Court, looking to claw back compensation from former president Urs Roher and other managers on charges related to Archegos, as reported by «Reuters» on April 29.
«Additional civil actions relating to Credit Suisse’s relationship with Archegos Capital Management (Archegos) have been filed against Credit Suisse and certain officers and directors, including claims for breaches of fiduciary duties», Credit Suisse said in the report.
Officers Negligent
The suit, which was filed with the New York Supreme Court, alleges that the officers and directors were negligent under Swiss law, which left Credit Suisse vulnerable when Archegos failed. The Employees Retirement System for the City of Providence is the plaintiff in the case.
«The fundamental problem was that Credit Suisse's board did not provide the resources, people, technology, systems, and controls needed to comprehend the overall risk the bank was taking on, much less manage that risk,» the retirement fund said according to «Reuters».
Related to Archegos, in April of 2021, the bank accepted the resignations of risk and compliance overseer Lara Warner as well as top investment banker Brian Chin. Credit Suisse cut two-thirds of 2020’s dividend and halted a 1.5 billion stock buyback.
Rohner, for his part, waived part of his pay and eschewed the traditional Swiss «décharge» of legal liability from shareholders. A week later, the bank was forced to tap anchor shareholders and super-rich individuals for a $1.9 billion capital injection.
The report also reveals that the defeat in the Bermuda lawsuit cost the firm about $600 million and was originally estimated to be around $500 million.
