Now it is a lawsuit.
The trouble of Credit Suisse Group does not seem to end. After losing money due to Archegos Capital Management fallout and exposure to Greensill Capital, a pension fund has filed a lawsuit against the investment bank. The fund is alleging violations of federal securities laws.
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According to a Reuter's report, on Friday, the City of St. Clair Shores Police & Fire Retirement System, based out of Michigan, US filed the class-action lawsuit. This lawsuit is filed in federal court in Manhattan.
"Specifically, defendants concealed material defects in the Company's risk policies and procedures and compliance oversight functions and efforts to allow high-risk clients to take on excessive leverage, including Greensill Capital and Archegos Capital Management, exposing the company to billions of dollars in losses," the lawsuit said.
The banking giant had informed the investors that $7.3 billion finance fund related to Greensill Capital was low-risk as it was insured. However, the Swiss bank failed to ensure that the insurance policies will make the payout. There were reports stating as part of damage control, Credit Suisse may attempt to compensate investors hit by Greensill. But with the lawsuit filed against the banker, it does not feel the investors are convinced.
Within a span of one month, the fallout of British fund Greensill and US investment fund Archegos Capital hit Credit Suisse. The losses due to Archegos Capital fallout was $4.7 billion and with Greensill it is $2.3 billion worth of loans exposed to financial and litigation uncertainties.
Post the Archegos Capital fallout, the board of directors of the group decided to pull up two top executives. This resulted in Brian Chin, CEO of the Investment Bank and Lara Warner, Chief Risk and Compliance Officer stepping down from their respective positions.