Home Hedge Funds Hedge fund joins list of entities suing Credit Suisse

Hedge fund joins list of entities suing Credit Suisse

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Protesters at the last Credit Suisse AGM

Protesters at the last Credit Suisse AGM

Protesters make their feelings felt at the last Credit Suisse AGM in 2023.


KEYSTONE/© KEYSTONE / MICHAEL BUHOLZER

Hedge fund Appaloosa LP became the latest to sue over the $17 billion wipeout of high-risk bonds last year that was part of the deal to save Credit Suisse bank from a full-scale collapse.

Hedge fund Appaloosa LP became the latest to sue over the $17 billion wipeout of high-risk bonds last year that was part of the deal to save Credit Suisse bank from a full-scale collapse.

+ Credit Suisse AT1 “rip-off” could cost Swiss taxpayer

Appaloosa served as investment adviser to Palomino Master and Azteca Partners, who are also plaintiffs in the lawsuit, for their purchases of Credit Suisse debt known as Additional Tier 1 bonds, or AT1s.

The funds suffered “significant investment losses” when UBS bought Credit Suisse and the bonds were written to zero just days after Palomino and Azteca had purchased them in March 2023, according to the complaint filed Tuesday in federal court in Newark, New Jersey.

The investors claim Credit Suisse misled them about its well-being when they bought the notes. 

Credit Suisse’s liquidity position was misrepresented “as very strong and ‘getting stronger’ at a time when there was a run on the bank and Credit Suisse was losing billions of dollars in withdrawals on a daily basis,” according to the complaint.

A UBS representative didn’t immediately respond to a request for comment. Lawyers for Appaloosa declined to comment.

The complaint is one of many filed over the AT1 bond wipeout. 

The plaintiffs allege violations of securities laws and the New Jersey Racketeer Influenced and Corrupt Organizations Act. They are seeking unspecified damages. 

The case is Palomino Master Ltd. v. Credit Suisse Group AG, 24-cv-05539, US District Court, District of New Jersey (Newark).

©2024 Bloomberg L.P.


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