FINMA in hot water: 230 lawsuits filed against regulator over UBS-CS merger

FINMA in hot water: 230 lawsuits filed against regulator over UBS-CS merger

الثلاثاء, مايو 23rd 2023

At least 230 lawsuits have been filed against FINMA over the UBS-Credit Suisse merger. CS employees this week announced they are filing their own lawsuit against the financial regulator.

In the weeks since Switzerland’s financial regulator (FINMA) announced that it had backed a shotgun merger between UBS and Credit Suisse (CS), at least 2,500 parties have filed 230 lawsuits against FINMA contesting the value of CS’s AT1 bonds.

Nicola Siegrist speaks to people protesting the takeover of Credit Suisse by UBS in Zurich on March 20, 2023 (Keystone SDA).
Shareholders before bondholders

Under the merger, FINMA sanctioned rendering CHF 16.2 billion of CS’s Additional Tier 1 (AT1) bonds worthless – triggering upheaval in the markets. Meanwhile, CS shareholders will receive nearly CHF3 billion. The deal overturned a long-standing practice of putting bondholders before shareholders in debt recovery.

The bondholders are seeking compensation for clients whose assets have been confiscated, according to representatives from the international law firm Quinn Emanuel Urquhart & Sullivan.

FINMA officials and the Swiss government say their decision was legally indisputable.

A Scientist Rebellion activist symbolically cleans Credit Suisse’s entrance during a protest against fossil fuel investments in Zurich on Wednesday May 10, 2023 (Keystone SDA).
CS employees join suit

This week CS employees تم الإعلان that they, too, are preparing to sue FINMA over canceling CHF 360 million in bonuses.

In the weeks following the merger announcement, the Swiss government instructed CS to cancel or reduce outstanding bonuses for the top three levels of managers. According to Swiss banking laws, the government can direct such decisions if the bank in question has received federal aid.

According to lawyers from Quinn Emanuel and Pallas law firms, CS senior managers do not think the move was legal and have retained them to take legal action on their behalf.

Stay tuned.

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