An influential group of Swiss and international investors suffering losses from the write-off of subordinated Credit bonds is taking legal action against Switzerland's financial regulator. It could be the first among a wave of lawsuits.
A group of Swiss and international investors holding over 4.5 billion francs ($5.2 billion) of now worthless Credit Suisse AT1 bonds has filed an appeal against the Swiss Financial Market Supervisory Authority (Finma) which ordered the bank to write off some $17 billion of the debt instruments as part of its takeover by UBS, according to an emailed communiqué by law firm Quinn Emanuel Urquhart & Sullivan on Friday.
The investors accuse Finma of failing to behave proportionately and in good faith in their decision to wipe out Credit Suisse AT1 bonds when UBS took over Credit Suisse.
Usually, in the case of bankruptcy, bondholders stand in line ahead of stockholders when the remaining funds are divided up. In the case of AT1 bonds, however, if certain provisions are met, they can either be turned into equity or written off.
In its defense, Finma said it received permission from Swiss lawmakers to fully write off the AT1 bonds, saying it was contractually, permitted to do so.
The law firm has won 86 percent out of 2,500 cases tried, it said in its email. The firm's managing partner in Switzerland is Thomas Werlen.
Separately, a group of about 30 investors in Singapore, including individual investors and family offices, are also seeking to sue the Swiss government over Credit Suisse's AT1 bond wipeout.
