Credit Suisse AT1 bondholders sue the Swiss Confederation over Finma’s decision to write down bonds to zero during the UBS takeover.

Credit Suisse AT1 bondholders are taking action against Switzerland following the UBS takeover. They announced on Thursday that they have filed a class action lawsuit against the Swiss Confederation in a district court in New York.

The plaintiffs are defending themselves against an order issued by the Swiss Financial Market Supervisory Authority Finma on March 19.

This order was part of the emergency rescue of Credit Suisse by UBS and mandated that Credit Suisse’s AT1 bonds be written down to zero. The plaintiffs claim, “By issuing this order, Switzerland unlawfully interfered with the property rights of the plaintiffs.”

Switzerland facilitated the sale of the troubled Credit Suisse and chose UBS as the only remaining major Swiss bank. The plaintiffs argue, “In doing so, Switzerland ignored other potential buyers.

Furthermore, to make the takeover as attractive as possible for UBS, Switzerland extinguished Credit Suisse’s outstanding AT1 bonds amounting to around $17.3 billion. This was unnecessary and violated the rights of the plaintiffs,” as stated in their communiqué.

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