In a Friday complaint, shareholder Carlos de March Bosch pointed to media reports following Russia's invasion of Ukraine in late February indicating that Credit Suisse asked so-called nonparticipating investors who received information about the bank's loan portfolio to destroy any confidential information the bank provided regarding a November 2021 securitization deal.
In that deal, Credit Suisse sold off $80 million worth of risk related to a $2 billion portfolio of loans backed by assets owned by "certain of the bank's ultra-high net worth clients," according to the complaint. The bank entered into the deal as Russia was building up its military forces on its border with Ukraine.
The investor alleged that the bank failed to disclose that the deal involved loans Credit Suisse made to Russian oligarchs previously sanctioned by the United States and that the purpose of the deal was to offload the risks and "mitigate the impact on Credit Suisse of sanctions likely to be implemented by Western nations in response to Russia's invasion of Ukraine." The bank also didn't disclose that its request to nonparticipating investors was intended to conceal its noncompliance with sanctions in its lending practices, according to the complaint.
Following the media reports, the U.S. House Committee on Oversight and Reform asked Credit Suisse on March 28 to turn over information and documents about a portfolio of loans backed by yachts and private jets owned by clients, potentially including sanctioned Russian individuals. At the end of that day, Credit Suisse's stock price fell more than 2.5% per share to close at $7.94, according to the complaint.
"As a result of defendants' wrongful acts and omissions, and the precipitous decline in the market value of the company's securities, plaintiff and other class members have suffered significant losses and damages," Carlos de March Bosch alleged.
A representative of Credit Suisse declined to comment on the suit but pointed to a March 3 statement from the company, which is also included in the complaint. The Swiss bank said its request to nonparticipating investors was stipulated under a nondisclosure agreement and was unrelated to "the recent implementation of additional sanctions — with which we are fully compliant."
"Reminding parties to destroy confidential information is good housekeeping and good data hygiene," Credit Suisse had said. "The transaction and the request to nonparticipating investors to destroy confidential data are entirely unrelated to the ongoing conflict in Eastern Europe."
Counsel for the investor didn't immediately respond to a request for comment Monday.
According to the complaint, Credit Suisse has a history of business dealings with Russian oligarchs.
In the House Oversight Committee's March letter, lawmakers wrote that Credit Suisse's action raises "significant concerns" that it may be concealing information about whether participants in the deal are evading sanctions, given the timing of the bank's request and subject matter. They said the bank's request coincided with Switzerland's announcement that it would join the United States, the European Union and other countries in imposing economic sanctions against Russia.
The proposed class includes anyone who acquired Credit Suisse securities between March 19, 2021, and March 25, 2022. The complaint also names as defendants Credit Suisse CEO Thomas P. Gottstein and Chief Financial Officer David R. Mathers.
The proposed class is seeking damages, pre- and post-judgment interest, attorney fees and costs.
Carlos de March Bosch is represented by Jeremy A. Lieberman and Thomas H. Przybylowski of Pomerantz LLP.
Counsel information for the defendants wasn't available Monday.
The case is March Bosch v. Credit Suisse Group AG et al., case number 1:22-cv-02477, in the U.S. District Court for the Eastern District of New York.
--Editing by Rich Mills.
For a reprint of this article, please contact reprints@law360.com.
