Wollmuth Maher & Deutsch LLP has filed a complaint, with Quinn Emanuel Urquhart & Sullivan LLP, in the United States District Court for the Southern District of New York on behalf of numerous investors alleging that the Swiss Confederation improperly ordered the write down of Credit Suisse AG (“Credit Suisse”)’s Additional Tier 1 bonds (“AT1”s).

The complaint alleges that, when Credit Suisse encountered financial difficulties in March of 2023, Switzerland brokered a merger between Credit Suisse and the only remaining major Swiss bank, UBS Group AG (“UBS”). Rather than follow restructuring procedures developed after the 2008 financial crisis or opening up the bidding to other potential buyers, the complaint alleges that Switzerland pushed through the deal with UBS and thus allowed UBS the ability to dictate the terms of the transaction. UBS has thrived since the merger and posted the biggest ever quarterly profit that any bank has ever posted in Q2 2023.

The same day the takeover was announced, Switzerland’s financial regulator ordered Credit Suisse to write down its AT1 bonds, permanently cancelling them. Obligated to follow that order, Credit Suisse instructed its New York-based securities depository, the Depository Trust Company, to terminate all AT1 trading. However, the complaint alleges that that order to write down Credit Suisse’s AT1 bonds was neither authorized by the bond terms nor necessary to resolve Credit Suisse’s financial woes. The plaintiffs to this action, whose AT1s had a face value of over $82 million, saw their holdings wiped out.

The case is captioned CreditIncome Ltd. et al. v. The Swiss Confideration, Index No. 1:24-cv-04316-DEH. The as-filed complaint can be viewed here.