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FT: Finma wants to block access to confidential documents

Updated at 04 Apr 2024 11:40 am

In the legal dispute over the declaration of the AT1 bonds of Credit Suisse as worthless, the Financial Market Supervisory Authority Finma has written to the Federal Administrative Court against the publication of confidential documents. Representatives of the bond investors had demanded the disclosure of the documents.

The transmission of confidential procedural documents to the appellants could shake confidence in FINMA and thus cause damage to supervisory activities, according to FINMA's letter to the Federal Supreme Court dated March 2024, which was published on an online page on Thursday.

Finma also fears that the publication of the documents could also provide support for potential lawsuits against the Swiss state abroad. The "Financial Times" first reported on the letter.

Finma did not wish to comment further on the letter to the FAC on Thursday when asked by AWP. The supervisory authority is presenting its position on the AT1 write-down "in court", a Finma spokeswoman emphasized in a statement. "It is not conducting the numerous appeal proceedings via the media." Accordingly, Finma has already submitted over 100 detailed consultations to the Federal Administrative Court to date, she confirmed.

High fees

Due to the deletion of the AT1 bonds by FINMA, the FAC has received around 320 complaints on behalf of 3,000 complainants. According to the FT article, the decision by the Federal Administrative Court to impose administrative fees on each individual complainant instead of charging these fees at "group level" has also caused displeasure among bond investors.

The Federal Administrative Court generally charges the appellants an advance on costs in the amount of the estimated costs of the proceedings, a court spokesperson confirmed in response to an inquiry from AWP. This depends on the amount in dispute. According to the FT, the fees in the specific case range from CHF 200 for AT1 bonds worth more than CHF 10,000 to a fee of CHF 15,000 for investors with AT1 bonds worth more than CHF 5 million.

International lawsuits

In March 2023, FINMA issued an order instructing the faltering Credit Suisse to completely extinguish its AT1 bonds with a total value of around CHF 16 billion as part of the emergency takeover by UBS. Investors in the high-interest financial instruments thus had to accept a total loss.

Such AT1 bonds, which are counted as "Additional Tier 1" capital, can be written off if a financial institution gets into difficulties. At the time, FINMA stated that the public sector assistance for Credit Suisse was an event that justified such a procedure.

The Finma ruling also made waves internationally. According to media reports, various law firms from different Asian countries intend to file lawsuits against the Swiss state before international arbitration tribunals in this connection. A group of bond investors had also announced that they would sue Switzerland for expropriation in a US court.


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